Exhibit 10.85
[CONFIDENTIAL TREATMENT REQUESTED]
[Certain information has been omitted herein pursuant to a request for
confidential treatment pursuant to Rule 24b-2.]
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AGREEMENT
between
CHIRON CORPORATION
and
CEPHALON, INC.
January 7, 1994
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TABLE OF CONTENTS
PAGE NO.
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PART I - DEFINITIONS
ARTICLE 1 - DEFINITIONS
Affiliate................................................................. 2
Allowable Expense......................................................... 2
Alternate Facility........................................................ 2
bFGF...................................................................... 2
Calendar Quarter.......................................................... 2
Cardioxane................................................................ 2
CCP....................................................................... 2
Cephalon.................................................................. 2
Cephalon Agreements....................................................... 2
Cephalon Facility......................................................... 2
Cephalon Technology....................................................... 3
Chiron.................................................................... 3
Chiron Agreements......................................................... 3
Chiron Facility........................................................... 3
Chiron Product............................................................ 3
Chiron Technology......................................................... 3
CIBA...................................................................... 3
CIBA Agreement............................................................ 3
Collaboration............................................................. 3
Commercialization Date.................................................... 4
Compound.................................................................. 4
Continuing Licensee....................................................... 4
Cost...................................................................... 4
Development Committee..................................................... 4
Development Plan.......................................................... 4
Effective Date............................................................ 4
Field..................................................................... 4
GMP Grade................................................................. 4
IND....................................................................... 4
JV........................................................................ 5
Joint Technology.......................................................... 5
JV Technology............................................................. 5
Major Market.............................................................. 5
Management Committee...................................................... 5
Manufacturing Information................................................. 5
Marketing Committee....................................................... 5
Market Exclusivity........................................................ 5
Marketing Plan............................................................ 5
NDA....................................................................... 5
Net Sales................................................................. 6
Operating Losses.......................................................... 6
Operating Profits......................................................... 6
Pricing Approval.......................................................... 7
Product................................................................... 7
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Regulatory Approval....................................................... 7
Regulatory Standards...................................................... 7
Royalty Territory......................................................... 7
SIBIA Rights.............................................................. 7
SOD....................................................................... 7
Specifications............................................................ 7
Technical Information..................................................... 7
Territory................................................................. 8
Third Party Royalties..................................................... 8
Trademark................................................................. 8
PART II - ACTIVITIES IN MAJOR MARKETS
ARTICLE 2 - PURPOSE, MANAGEMENT, ETC. OF THE COLLABORATION
SECTION 2.1 Purpose of Collaboration............................... 8
SECTION 2.2 Structure.............................................. 8
SECTION 2.3 Management Committee................................... 8
SECTION 2.4 Development Committee.................................. 9
SECTION 2.5 Membership; Duties of Members and Alternate Members.... 9
SECTION 2.6 Authorized Actions..................................... 10
SECTION 2.7 Meetings............................................... 10
SECTION 2.8 Locations of Meetings.................................. 10
SECTION 2.9 Conduct of Meetings.................................... 10
SECTION 2.10 Additional Committees.................................. 11
SECTION 2.11 Exclusion from Allowable Expenses...................... 11
SECTION 2.12 Cooperation of Collaborators........................... 11
SECTION 2.13 Duties of Collaborators................................ 11
ARTICLE 3 - RESEARCH AND DEVELOPMENT ACTIVITIES
SECTION 3.1 Priorities; Plans; Budgets............................. 11
SECTION 3.2 Clinical Supplies of Products.......................... 13
SECTION 3.3 Regulatory Approvals................................... 14
SECTION 3.4 Balancing of Development Costs......................... 15
ARTICLE 4 - COMMERCIALIZATION ACTIVITIES IN MAJOR MARKETS
SECTION 4.1 Marketing Strategy in Major Markets.................... 16
SECTION 4.2 Responsibilities of the Parties........................ 17
SECTION 4.3 Commercialization of Products.......................... 18
SECTION 4.4 Labelling.............................................. 18
SECTION 4.5 Manufacture of Commercial Supplies of Products......... 18
SECTION 4.6 Activities of Chiron Outside the Field................. 21
ARTICLE 5 - LICENSES
SECTION 5.1 Cross-Licenses Prior to Formation of JV................ 23
SECTION 5.2 Licenses to JV......................................... 24
SECTION 5.3 Licenses from JV to Collaborators in the Major Markets. 24
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SECTION 5.4 License from JV to Chiron in the Royalty Territory..... 24
SECTION 5.5 Optional Rights........................................ 24
SECTION 5.6 Retained Rights........................................ 26
SECTION 5.7 Prior Rights........................................... 26
SECTION 5.8 Inventions............................................. 26
SECTION 5.9 New Technologies....................................... 26
SECTION 5.10 Maintenance of Technology.............................. 27
SECTION 5.11 Sublicensing of Technology............................. 27
SECTION 5.12 Disclosure of Technology............................... 27
ARTICLE 6 - COMPENSATION IN MAJOR MARKETS
SECTION 6.1 Equal Sharing of Operating Profits and Losses.......... 28
SECTION 6.2 Special Allocations.................................... 28
SECTION 6.3 Off-Label Sales in the Major Markets................... 29
SECTION 6.4 Royalties to Chiron on Sales of Chiron Products........ 29
SECTION 6.5 Calculation of Operating Profits....................... 31
PART III - ACTIVITIES IN ROYALTY TERRITORY
ARTICLE 7 - DEVELOPMENT AND COMMERCIALIZATION ACTIVITIES IN
ROYALTY TERRITORY
SECTION 7.1 Development and Commercialization Responsibilities..... 32
SECTION 7.2 Coordination with Collaboration........................ 32
SECTION 7.3 Diligence in Commercialization of Products............. 33
SECTION 7.4 Ownership of Data...................................... 33
SECTION 7.5 No Allowable Expenses.................................. 33
SECTION 7.6 Assistance by the JV................................... 33
SECTION 7.7 Contingent Cephalon Marketing Rights................... 33
ARTICLE 8 - ROYALTIES AND REPORTS, ETC.
SECTION 8.1 Royalties.............................................. 34
SECTION 8.2 Royalty Rate Adjustments............................... 34
SECTION 8.3 Allocation of Net Sales in the Royalty Territory....... 36
SECTION 8.4 Third Party Royalties.................................. 36
SECTION 8.5 Payment of Royalties................................... 37
SECTION 8.6 Reports................................................ 37
SECTION 8.7 Currency Restrictions.................................. 37
SECTION 8.8 Taxes.................................................. 37
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PART IV - GENERAL PROVISIONS
ARTICLE 9 - INTELLECTUAL PROPERTY MATTERS
SECTION 9.1 Intellectual Property Protections...................... 38
SECTION 9.2 Defense of Infringement Claims......................... 38
SECTION 9.3 Prosecution of Third Party Infringements............... 39
SECTION 9.4 Joinder................................................ 40
SECTION 9.5 Settlement of Claims................................... 40
SECTION 9.6 Cooperation............................................ 40
SECTION 9.7 Trademark Matters...................................... 41
ARTICLE 10 - PAYMENTS AND RECORDS
SECTION 10.1 Payments............................................... 42
SECTION 10.2 Books and Records; Accounting.......................... 42
ARTICLE 11 - CERTAIN REGULATORY MATTERS
SECTION 11.1 Governmental Inspections and Inquiries................. 43
SECTION 11.2 Adverse Reactions...................................... 43
SECTION 11.3 Recalls and Market Withdrawals......................... 43
ARTICLE 12 - CONFIDENTIALITY, ETC.
SECTION 12.1 Confidentiality........................................ 44
SECTION 12.2 Injunctive Relief...................................... 45
SECTION 12.3 Publicity.............................................. 45
ARTICLE 13 - CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 13.1 Corporate Status and Authority......................... 46
SECTION 13.2 No Inconsistent Agreements............................. 47
ARTICLE 14 - DISCLAIMER, INDEMNIFICATION AND INSURANCE
SECTION 14.1 No Warranty............................................ 47
SECTION 14.2 Defense of Claims in Territory......................... 47
SECTION 14.3 Costs and Expenses..................................... 47
SECTION 14.4 Indemnity for Excluded Liabilities..................... 48
SECTION 14.5 Procedures for Indemnification......................... 48
SECTION 14.6 Settlements, etc....................................... 48
SECTION 14.7 Limitation of Liability................................ 48
SECTION 14.8 Insurance.............................................. 49
ARTICLE 15 - DISPUTE RESOLUTION
SECTION 15.1 Dispute Resolution..................................... 49
SECTION 15.2 Arbitration............................................ 49
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ARTICLE 16 - TERM AND TERMINATION
SECTION 16.1 Term................................................... 50
SECTION 16.2 Termination of Agreement in Full....................... 50
SECTION 16.3 Action upon Change of Control.......................... 50
SECTION 16.4 Partial Termination in Royalty Territory............... 51
SECTION 16.5 Rights and Obligations on Termination.................. 51
SECTION 16.6 Termination upon CCP Transfer.......................... 54
SECTION 16.7 Effective Date of Termination.......................... 54
SECTION 16.8 Survival............................................... 54
SECTION 16.9 Remedies not Exclusive................................. 54
ARTICLE 17 - MISCELLANEOUS
SECTION 17.1 Entire Agreement; Amendment............................ 54
SECTION 17.2 References to CIBA..................................... 55
SECTION 17.3 Force Majeure.......................................... 55
SECTION 17.4 No Interference with Existing Businesses............... 55
SECTION 17.5 Compliance with Law.................................... 55
SECTION 17.6 Waiver................................................. 55
SECTION 17.7 No Assignment.......................................... 55
SECTION 17.8 Severability........................................... 56
SECTION 17.9 Notices................................................ 56
SECTION 17.10 Pronouns............................................... 57
SECTION 17.11 Further Instruments.................................... 57
SECTION 17.12 Governing Law.......................................... 57
SECTION 17.13 Counterparts........................................... 57
SCHEDULE I - Third Party Agreements
SCHEDULE II - Field Exclusion
SCHEDULE III - SOD Technology
SCHEDULE IV - Third Party Royalties
SCHEDULE V - Development Expenses for Transition Period
SCHEDULE VI - Allowable Expenses and Accounting Principles
SCHEDULE VII - Preferred Indications of Chiron
SCHEDULE VIII - Cephalon Nonfield Indications
EXHIBIT A - Specifications
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AGREEMENT
This AGREEMENT, dated as of January 7, 1994, is made by and between CHIRON
CORPORATION, a Delaware corporation ("Chiron"), and CEPHALON, INC., a Delaware
corporation ("Cephalon"). Chiron and Cephalon are sometimes referred to
herein as "Collaborators" and individually as a "Collaborator".
BACKGROUND
A. Cephalon possesses certain intellectual property rights (including a
license from Cephalon Clinical Partners, L.P. ("CCP")) relating to uses of
insulin-like growth factor 1 ("IGF-1") for certain neurological diseases,
disorders and conditions (such as amyotrophic lateral sclerosis ("ALS") and
peripheral neuropathies) and its production and use as a therapeutic agent in
man. Cephalon has an ongoing clinical development program relating to IGF-1
as a therapeutic agent for ALS and certain peripheral neuropathies. Cephalon
wishes to have the benefit of Chiron's expertise in the development and
production of IGF-1 for neurological disorders.
B. Chiron possesses certain intellectual property rights (including a
license from Ciba-Geigy Ltd. ("CIBA")) relating to uses of IGF-1 for certain
neurological diseases, disorders and conditions (such as diabetic
neuropathy), and its production and use as a therapeutic agent in man.
Chiron wishes to have the benefit of Cephalon's expertise in the development
of therapeutic compounds in the neurological field.
C. Chiron and Cephalon have substantial development programs relating
to their respective uses of IGF-1.
D. Chiron possesses certain intellectual property rights and is
otherwise developing other compounds and methodologies that offer promise of
therapeutic application in neurological applications, together with and
independent of IGF-1.
E. Cephalon intends to develop a sales and marketing expertise focusing
principally on the neurology market.
F. Cephalon and Chiron believe that a joint development program that
optimizes the contributions of each of Cephalon and Chiron will accelerate
the beneficial application of IGF-1 and other compounds to address important
unmet needs for therapeutic products applicable to neurological diseases,
disorders and conditions and will be in their mutual and individual best
interests.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and intending to be legally bound hereby, the parties agree as
follows:
PART I - DEFINITIONS
ARTICLE 1 - DEFINITIONS
As used in this Agreement, the following terms shall have the
corresponding meanings set forth below:
(a) "AFFILIATE" means any individual or entity directly or indirectly
controlling, controlled by or under common control with, a party to this
Agreement. Without limiting the foregoing, the direct or indirect ownership
of over 50% of the outstanding voting securities of an entity, or the right
to receive over 50% of the profits or earnings of an entity, shall be deemed
to constitute control.
(b) "ALLOWABLE EXPENSE" means the Costs incurred by the JV or a
Collaborator under this Agreement pursuant to a budget approved by the
Management Committee (including a budget contained in a Development Plan) or
that are otherwise approved by the Management Committee as an Allowable
Expense. The term "Allowable Expense" also shall include the Costs incurred
by a party in a Major Market pursuant to Sections 9.2(c), 9.3(b), 9.3(e) and
9.6 (patent defense and prosecution), Section 11.3 (recalls and withdrawals)
or Section 14.3 (joint liability claims) to the extent such Costs are
determined by the Management Committee to be reasonable.
(c) "ALTERNATE FACILITY" has the meaning specified in Section 4.5(a)
hereof.
(d) "bFGF" means basic Fibroblast Growth Factor.
(e) "CALENDAR QUARTER" means each three-month period beginning on
January 1, April 1, July 1 and October 1 of each year.
(f) "CARDIOXANE-TRADEMARK-" means the substance known by the chemical
name of dexrazoxane, and any analogues or derivatives thereof.
(g) "CCP" means Cephalon Clinical Partners, L.P.
(h) "CEPHALON" means Cephalon, Inc. and any Affiliate thereof.
(i) "CEPHALON AGREEMENTS" means the agreements specified on Schedule I
hereto pursuant to Section 13.1 hereof.
(j) "CEPHALON FACILITY" means the facility of Cephalon located at 0000
Xxxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000, or any other
facility of Cephalon approved by the Management Committee for use in the
manufacture of Products under this Agreement.
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(k) "CEPHALON TECHNOLOGY" means any existing or future (i) patent
application or issued patent owned or possessed (by license or otherwise) by
Cephalon containing a claim that would be infringed by the manufacture, use
or sale of a Product in the Territory, including any addition, continuation,
continuation-in-part, division, extension or renewal thereof, (ii) Technical
Information owned or possessed (by license or otherwise) by Cephalon, (iii)
the rights of Cephalon in and to any Trademark and (iv) all rights of Cephalon
in and to Joint Technology related to a Product; in each case, to the extent
Cephalon has the right to license or sublicense any such right. The term
"Cephalon Technology" shall not include the SIBIA Rights, unless otherwise
agreed in writing by Cephalon and either Chiron or the JV pursuant to Section
5.5 hereof.
(l) "CHIRON" means Chiron Corporation and any Affiliate thereof.
(m) "CHIRON AGREEMENTS" means the agreements specified on Schedule I
hereto pursuant to Section 13.1 hereof.
(n) "CHIRON FACILITY" means the facility or facilities of Chiron
approved by the Management Committee for use in the manufacture of Products
under this Agreement.
(o) "CHIRON PRODUCT" means any Product of Chiron or the Collaboration in
the field that contains SOD, Cardioxane or bFGF, whether alone or in
combination with an active ingredient other than IGF-1.
(p) "CHIRON TECHNOLOGY" means any existing or future (i) patent
application or issued patent owned or possessed (by license or otherwise) by
Chiron containing a claim that would be infringed by the manufacture, use or
sale of a Product in the Territory, including any addition, continuation,
continuation-in-part, division, extension or renewal thereof, (ii) Technical
Information owned or possessed (by license or otherwise) by Chiron, (iii) the
rights of Chiron in and to any Trademark, and (iv) all rights of Chiron in
and to Joint Technology related to a Product; in each case, to the extent
Chiron has the right to license or sublicense any such right.
(q) "CIBA" means Ciba-Geigy Ltd.
(r) "CIBA AGREEMENT" means the Agreement and License between Chiron and
CIBA dated as of December 31, 1993.
(s) "COLLABORATION" means the business of developing and commercializing
Products within the Territory, whether conducted directly by Cephalon and
Chiron or through the JV.
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(t) "COMMERCIALIZATION DATE" means the date of the first commercial sale
of a Product in a Major Market following Regulatory Approval.
(u) "COMPOUND" means each of IGF-1, SOD, Cardioxane and bFGF and any
composition or product added by the parties to the Collaboration in
accordance with Section 5.9(b) hereof.
(v) "CONTINUING LICENSEE" has the meaning specified in Article 16.5
hereof.
(w) "COST" means the fully burdened, fairly allocated internal costs of
a party, on a consolidated basis, including reasonable and customary
allocations of indirect and overhead expense and charges in the nature of
depreciation and amortization of capitalized cost, and out-of-pocket
expenses, to the extent any of the foregoing were incurred in accordance with
the accounting methodology authorized pursuant to Section 2.3(c) hereof. The
term "Cost" also shall include an interest charge for working capital made
available by a Collaborator for inventory and receivables related to the
Products, upon terms to be approved by the Management Committee. A
Collaborator shall not be required to make working capital available for such
purposes.
(x) "DEVELOPMENT COMMITTEE" means the committee established pursuant to
Section 2.4 hereof.
(y) "DEVELOPMENT PLAN" has the meaning specified in Section 3.1 hereof.
(z) "EFFECTIVE DATE" means the first date when both Cephalon and Chiron
have executed this Agreement.
(aa) "FIELD" means the prophylactic and/or therapeutic treatment of
neurological diseases and disorders in humans including, without limitation,
ALS and peripheral neuropathies such as post-polio syndrome,
chemotherapy-induced peripheral neuropathy, diabetic neuropathy and
Charcot-Xxxxx-Tooth syndrome. The "Field" does not include the uses defined
in SCHEDULE II hereto.
(ab) "GMP GRADE" means production of a Product in accordance with the
Regulatory Standards and the process and procedures described in the
Manufacturing Information.
(ac) "IND" means an application for an Investigational Exemption for a
New Drug filed with the FDA with respect to a Product, or any comparable
filing made with a regulatory authority outside the United States.
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(ad) "JV" means the joint venture to be established by Cephalon and
Chiron in accordance with Section 2.2 hereof.
(ae) "JOINT TECHNOLOGY" means any invention or discovery, whether or not
patentable and whether or not in the Field (i) that is made solely or jointly
by a JV employee, or (ii) as to which Cephalon and Chiron would be deemed
joint inventors in accordance with U.S. patent laws.
(af) "JV TECHNOLOGY" has the meaning specified in Section 5.2(c) hereof.
(ag) "MAJOR MARKET" means (i) each of the United States, Canada, Mexico,
Austria, Finland, Norway, Sweden and Switzerland and each member country of
the European Economic Community ("EEC") as constituted on the Effective Date,
whether or not any such country remains a member of the EEC during the term
of this Agreement; and (ii) any country which joins the EEC after the
Effective Date. If any of the specified countries dissolves or otherwise
converts into constituent parts, any country or countries resulting from such
dissolution shall automatically be included in the definition of "Major
Market".
(ah) "MANAGEMENT COMMITTEE" means the committee established pursuant to
Section 2.3 hereof.
(ai) "MANUFACTURING INFORMATION" means all chemistry, formulation,
manufacturing, quality control and other information required to be included
in as IND or NDA for a Product.
(aj) "MARKETING COMMITTEE" means the committee to be established pursuant
to Section 4.1 hereof.
(ak) "MARKET EXCLUSIVITY" means, with respect to a Product, any of the
following: (i) sale of the Product in the country in question would infringe
a claim of an issued patent owned or possessed (by license or otherwise) in
whole or in part by a Collaborator or the JV that has not expired or been
held invalid or unenforceable by a court of competent jurisdiction in a final
and nonappealable or non-appealed judgment, or (ii) the Product or the
indication for the Product enjoys market exclusivity by reason of any statute,
regulation, rule or order of a governmental authority in the country.
(al) "MARKETING PLAN" has the meaning specified in Section 4.1 hereof.
(am) "NDA" means a New Drug Application or a Product License Application
filed with the FDA with respect to a Product, or any comparable filing made
with a regulatory authority outside the United States.
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(an) "NET SALES" means the invoiced price of a Product charged to an
unaffiliated end user in the Territory (i.e., a third party whose use is
intended to result in the consumption or destruction of the Product), net of
returns and rejections, and after deducting, (i) sales or similar taxes,
packaging charges, freight and insurance, to the extent charged to the
purchaser or directly attributable to the specific sale, (ii) cash, trade and
quantity discounts actually allowed and taken, and (iii) allowances, rebates
and commissions actually taken or paid. With respect to sales of a Product
in the Royalty Territory, if a Product is sold with a single invoiced price
in combination with another therapeutically active component or components or
as a combination with diagnostic products where one or more components or
products are not Products, Net Sales under such circumstances shall be
calculated by multiplying Net Sales of the combination by the fraction A/(A
B), in which A is the invoiced price of the Products, if sold separately, and
B is the total invoiced price of any other active components or components in
combination, if sold separately. If the Product and/or the active components
or components in the combination are not sold separately, the values of the
individual components shall be reasonably determined by the Management
Committee. The value of the components of the combination will be based on,
but not limited to, the cost of manufacturing, the value of comparable
components marketed by others and the potential value based on the current
cost of diagnosing and treating the disease. In the case of a combination
product marketed by the Collaboration in the Major Markets, the Management
Committee shall determine the portion of the invoiced price of such product
that is to be treated as Net Sales under this Agreement.
(ao) "OPERATING LOSSES" means any negative number which results from the
calculation of Operating Profits.
(ap) "OPERATING PROFITS" means for the applicable accounting period, the
sum of: [CONFIDENTIAL TREATMENT REQUESTED]; LESS [CONFIDENTIAL TREATMENT
REQUESTED] for the applicable accounting period.
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(aq) "PRICING APPROVAL" means any pricing or third party reimbursement
approval required for the marketing of a Product.
(ar) "PRODUCT" or "PRODUCTS" means any product consisting of or
containing a Compound, whether alone or in combination with another active
ingredient, to the extent that it is being developed for a use or is used, or
has received Regulatory Approval for a use, in the Field. The term "Products"
excludes any product containing a Compound to the extent it is being
developed for a use or is used, or has received Regulatory Approval for a
use, outside the Field, except to the extent provided under Sections 6.2, 6.3
and 8.3 hereof. The term "Products" also excludes any composition of Chiron
or Cephalon that does not contain a Compound, even if such composition is
used within the Field.
(as) "REGULATORY APPROVAL" means any marketing authorization (including
authorizations approving an NDA) required for a Product, exclusive of Pricing
Approvals.
(at) "REGULATORY STANDARDS" means (i) the facility license requirements
and the current Good Manufacturing Practice regulations of the FDA applicable
to the manufacturing facility for, or the production, storage or handling of
Products, and (ii) any standards of any governmental authority, whether
within or outside the United States (including, without limitation, the
Environmental Protection Agency, OSHA and state and local authorities), that
apply to the manufacturing facility for, or the production, storage or
handling of, Products.
(au) "ROYALTY TERRITORY" means the portion of the Territory other than
the Major Markets.
(av) "SIBIA RIGHTS" means the patent rights, know-how and other
intellectual property rights licensed by Cephalon from The Salk Institute of
Biotechnology/Industrial Associates, Inc. pursuant to the License Agreement
dated March 5, 1992.
(aw) "SOD" means superoxide dismutase compounds and related technology
described on SCHEDULE III hereto.
(ax) "SPECIFICATIONS" means the manufacturing, quality control,
packaging, labelling, shipping and storage specifications for each Product,
to be agreed to by the parties in writing after the Effective Date and made a
part of this Agreement as EXHIBIT A hereto. All Products shall be supplied
under this Agreement in final, finished and vialed form suitable for end use.
(ay) "TECHNICAL INFORMATION" means know-how, trade secrets, technical
information, formulae, processes and data
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owned or possessed (by license or otherwise) by a Collaborator which relate
to the composition, manufacture or use of a Product, including, without
limitation, preclinical or clinical results.
(az) "TERRITORY" means the world excluding Japan.
(ba) "THIRD PARTY ROYALTIES" means the royalties payable to third party
licensors in the Major Markets under the agreements specified on SCHEDULE IV
hereto and any additional royalties payable in the Major Markets by the JV in
accordance with Section 5.9(a) hereof.
(bb) "TRADEMARK" means any trademark, tradename or trade dress designated
in writing by the Collaboration for use with a Product in the Territory,
whether pending, allowed or registered.
PART II - ACTIVITIES IN MAJOR MARKETS
ARTICLE 2 - PURPOSE, MANAGEMENT, ETC. OF THE COLLABORATION
SECTION 2.1 PURPOSE OF COLLABORATION. The purpose of the Collaboration
is to conduct research, product development and clinical activities and seek
Regulatory Approvals related to Products in the Territory and to
commercialize Products in the Territory. The parties will collaborate
exclusively with each other with respect to the development and
commercialization of the Products in the Territory and the Field. The parties
intend to share equally in certain costs of developing Products in the Major
Markets and in any ultimate Operating Profits or Losses.
SECTION 2.2 STRUCTURE. Chiron and Cephalon will conduct the
Collaboration pursuant to this Agreement until they establish a separate
legal entity for such purpose (the "JV"). The JV shall be formed no later
than the filing of the first application for Regulatory Approval of a
Product in the Territory. The JV, whether a partnership or a corporation
(the "JV"), shall be established in a written amendment or supplement to this
Agreement signed by Cephalon and Chiron.
SECTION 2.3 MANAGEMENT COMMITTEE.
(a) ESTABLISHMENT. The Collaboration, whether conducted directly
by Cephalon and Chiron or through the JV, will be managed by a Management
Committee, which is hereby established to carry out the business of the
Collaboration and implement the provisions of this Agreement.
(b) AUTHORITY. The Management Committee shall exercise such powers
as it deems necessary or desirable to further the purposes of the
Collaboration in the mutual best
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interests of the Collaborators, except to the extent that such powers are
reserved to the Collaborators by this Agreement. In particular, the
Management Committee shall be responsible for (i) approving an annual
development plan and budget for the Collaboration, (ii) reviewing the
performance (including the cost-effectiveness) of each Collaborator's and the
JV's activities, (iii) establishing the accounting methodologies for Costs,
Allowable Expenses and the calculation of Operating Profits in accordance
with paragraph (c) below, and (iv) approving acquisitions of technology from
third parties or the Collaborators pursuant to Section 5.9 hereof.
(c) ACCOUNTING METHODOLOGY. Initially, each Collaborator shall
apply its internal cost accounting principles and methodology in determining
Costs incurred with respect to the Collaboration, which shall be consistent
with generally accepted accounting principles and with the principles and
methodology applied by the Collaborator to its other projects and reasonably
acceptable to the Management Committee. The Management Committee shall review
the internal cost accounting principles and methodology of the Collaborators
and as soon as practicable, but in no event later than receipt of the first
Regulatory Approval of a Product in a Major Market, shall establish a
statement of cost accounting principles and methodology, consistent with
generally accepted accounting principles, to be used by each Collaborator and
the JV in recording and reporting Costs as Allowable Expenses and calculating
Operating Profits under this Agreement. The approved statement shall be
attached to this Agreement as SCHEDULE VI. Any disagreement with respect to
the development of the principles and methodologies to be set forth in
SCHEDULE VI shall be resolved by a reputable firm of independent public
accountants selected by the Collaborators.
SECTION 2.4 DEVELOPMENT COMMITTEE. A Development Committee is hereby
established under the supervision of the Management Committee to monitor all
research and development activities of the Collaboration, to carry out all
other obligations assigned to it under this Agreement or by the Management
Committee, and to make recommendations to the Management Committee with
respect to its activities. In particular, the Development Committee shall be
responsible for (i) preparing a preliminary annual development plan
containing project plans, schedules and annual budgets for approval by the
Management Committee, (ii) approving regulatory efforts of the Collaboration,
including the design of clinical trials to be conducted for each Product in
the Major Markets to the extent provided in Section 3.1, the identification of
clinical trial sites and the preparation and approval of clinical trial
protocols, and (iii) monitoring the progress of clinical activities.
SECTION 2.5 MEMBERSHIP, DUTIES OF MEMBERS AND ALTERNATE MEMBERS. Each
Collaborator shall appoint 50% of the members of
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the Management Committee and Development Committee. The Collaborators shall
designate the initial members promptly after the Effective Date. The
Management Committee members shall be members of the senior management of the
designating Collaborator. Each Collaborator may remove and replace its
representatives on the Management Committee and the Development Committee at
any time, without cause, upon written notice to the other Collaborator. An
alternate member designated by a Collaborator shall be entitled to vote only
in the absence of a regular member designated by such Collaborator. All
references to "members" in this Agreement refers to the regular members and
any alternate member acting in the place of a regular member.
SECTION 2.6 AUTHORIZED ACTIONS. Any action or decision by the
Management Committee or Development Committee must be authorized by the
approval of a majority of each party's designated members on the Committee,
unless otherwise specified in this Agreement. If the Development Committee
can not agree on a particular matter, the matter shall be submitted for
resolution to the Management Committee. If the Management Committee can not
agree on a particular matter, the matter shall be submitted for resolution in
accordance with Article 15 hereof.
SECTION 2.7 MEETINGS.
(a) FREQUENCY. The regular meetings of the Management Committee and
Development Committee shall be scheduled by a consensus of a majority of the
members. Any meetings of the two Committees may be combined into a joint
meeting. In no event, however, shall the Management Committee meet less
frequently than twice each year or the Development Committee meet less
frequently than quarterly. A special meeting of the Management Committee or
the Development Committee also may be called by any two members of the
applicable Committee.
(b) NOTICE. Notice of the date, time and place of every regular or
special meeting and a proposed agenda for the meeting shall be provided to
the members, no later than fifteen (15) days prior to the scheduled date of
the meeting (unless notice is waived in writing by the member).
SECTION 2.8 LOCATIONS OF MEETINGS. The regular and special meetings of
the Management Committee and the Development Committee shall alternate
between the principal business offices of each Collaborator, unless otherwise
agreed by a majority of the members of the applicable Committee.
SECTION 2.9 CONDUCT OF MEETINGS. Any regular or special meeting of the
Management Committee or the Development Committee may be conducted in person
or by conference telephone. The Management Committee and the Development
Committee may act without a meeting if a written consent to the action is
signed by
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a majority of each party's designated members of the applicable Committee.
Minutes reflecting actions taken at meetings shall be maintained with the
books and records of the Collaboration and shall be distributed to the
Collaborators upon request.
SECTION 2.10 ADDITIONAL COMMITTEES. The Management Committee may, from
time to time, delegate specific powers to special-purpose committees of the
Management Committee, other than the Development Committee. Any additional
committees, including the Marketing Committee to be established under Section
4.1 shall be constituted and shall operate in accordance with the procedures
of this Article 2.
SECTION 2.11 EXCLUSION FROM ALLOWABLE EXPENSES. All costs and expenses
incurred by a Collaborator in attending Management Committee, Development
Committee or other committee meetings and in otherwise conducting
negotiations and relations with the other Collaborator shall by borne by the
party incurring the expense and shall not be treated as an Allowable Expense,
unless specified in SCHEDULE VI or authorized by the Management Committee.
SECTION 2.12 COOPERATION OF COLLABORATORS. Each Collaborator shall
furnish to the Management Committee or other applicable committee, subject to
the confidentiality obligations specified in Article 12 hereof, all
information that is reasonably required for purposes of this Agreement.
SECTION 2.13 DUTIES OF COLLABORATORS. Each Collaborator shall perform
its functions under this Agreement in a manner it believes in good faith to
be consistent with the intention of the parties in entering into this
Agreement. Nothing in this Agreement is intended to create a fiduciary duty of
one Collaborator to the other, nor shall it be deemed to require either
Collaborator to expend funds or commit resources in excess of those approved
by the Management Committee.
ARTICLE 3 - RESEARCH AND DEVELOPMENT ACTIVITIES
SECTION 3.1 PRIORITIES; PLANS; BUDGETS.
(a) PRIORITIES. The Development Committee, subject to the approval of
the Management Committee, shall establish the research, development and
regulatory strategies related to the Products in the Field. The initial
priority of the Collaboration shall be assigned to the development of IGF-1
for use in treating ALS and peripheral neuropathies.
(b) ANNUAL PLAN AND BUDGET. Attached as Schedule V hereto is the
initial development budget for each Collaborator's research and development
activities (including third party
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subcontractors) related to Products in the Major Markets for the period from
October 1, 1993 through December 31, 1993. For each calendar year beginning
January 1, 1994, the Development Committee shall prepare and submit to the
Management Committee for approval an annual development plan and budget for
Products in the Major Markets. The plans and budgets included in SCHEDULE V
and each subsequent development plan and budget approved by the Management
Committee are referred to in this Agreement as the "Development Plans".
(c) IMPLEMENTATION. The Development Plans will set forth the
responsibilities of each Collaborator. The parties anticipate that the
regulatory strategies specified in the Development Plan will be implemented
by Cephalon, who will be responsible for, among other things, the conduct of
all clinical trials of Products in the Major Markets (including
post-approval, quality of life, cost-benefit and any other studies necessary
for Regulatory or Pricing Approvals in the Major Markets), the recruitment of
investigators, the monitoring of clinical trials and the performance of any
other activities required to obtain Regulatory Approvals and Pricing
Approvals in the Major Markets. Each party will make available its clinical
and regulatory assets to the extent specified in the applicable Development
Plan. The design of the clinical trials for IGF-1 that were initiated by
Cephalon prior to the Effective Date are hereby deemed to be approved. The
Development Committee will prepare for submission to the Management Committee
the design of the clinical trials that are to be initiated for Products after
the Effective Date.
(d) ASSISTANCE BY EUROCETUS. If determined to be cost-effective by the
Management Committee, Cephalon may contract separately with EuroCetus, B.V.,
a subsidiary of Chiron, for assistance in the clinical development of SOD
bFGF and Cardioxane in the Major Markets outside North America. Cephalon
will reimburse EuroCetus directly for the costs of providing such service,
with the reimbursement treated as an Allowable Expense of Cephalon.
(e) CLINICAL DATA. All clinical data obtained from any studies
conducted pursuant to the Development Plans shall be jointly owned by
Cephalon and Chiron and may be used by either Collaborator inside the Field
and inside the Territory, subject to the JV's right to use all such data for
purposes of the Collaboration in the Territory. All clinical data related to
a Product that is developed pursuant to the Development Plans may be used by
either Collaborator or its licensees or joint development partners outside
the Field or outside the Territory only to the extent required by applicable
law (such as to report adverse experiences) and, in the case of data related
to a Product containing a Compound other than IGF-1, may be used for any
other purpose by a Collaborator or its licensees or joint development
partners outside the Field or outside the Territory
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upon commercially reasonable terms. In addition to the permitted uses
described above, all clinical data related to a Product containing IGF-1 (i)
may be used by CCP, inside or outside the Field, to the extent required under
the applicable Cephalon Agreement, and (ii) may be used by Kyowa Hakko Kogyo in
Japan to the extent required by law (such as to report adverse experiences)
or for any other purpose upon commercially reasonable terms if Cephalon is
obligated to provide Kyowa with exclusive use of such data in Japan; and
(iii) may be used by Chiron and Cephalon outside the Field and inside the
Territory upon commercially reasonable terms. If Cephalon is not obligated to
provide Kyowa Hakko Kogyo with the exclusive use of such data, Chiron may
use the clinical data in Japan upon commercially reasonable terms. The grant
of rights to use clinical data as specified in this paragraph (e) shall not
be deemed to grant any express or implied rights or license in or to any other
intellectual property of a Collaborator.
(f) REPORTS. Each Collaborator shall report to the Development
Committee, upon reasonable request (but not less than every three months),
the status of its activities under the applicable Development Plan. The report
may be in writing or, at the option of the Collaborator, in an oral
presentation made at the Development Committee meeting.
SECTION 3.2 CLINICAL SUPPLIES OF PRODUCTS.
(a) GENERAL. For Products other than IGF-1, the parties agree that
Chiron shall manufacture the Collaboration's requirements of all finished
Products to be used for clinical trials and other development activities
under this Agreement, unless otherwise determined by the Management Committee.
(b) CLINICAL SUPPLIES OF IGF-1. The Management Committee shall
determine the appropriate time for Chiron to begin supplying IGF-1 for
clinical purposes. Until that time, Cephalon will continue to use supplies of
IGF-1 produced at the Cephalon Facility for clinical trials of IGF-1,
including supplies needed to complete the U.S and European clinical trials of
IGF-1 in treating ALS and the pilot trials of IGF-1 in treating peripheral
neuropathies.
(c) SCALE-UP OF CHIRON FACILITY. Chiron will use the Chiron
Facility at Vacaville, California (the "Vacaville Facility") to manufacture
the Collaboration's requirements of IGF-1 for clinical purposes in accordance
with the Development Plans. Chiron will make reasonable efforts, including
making capital investments, to scale-up and expand the applicable Chiron
Facility as needed to allow sufficient GMP Grade Product to be made in
accordance with the quantity, schedule and other requirements of the
applicable Development Plan. Without limiting the foregoing, Chiron will
proceed to install [CONFIDENTIAL TREATMENT REQUESTED]
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[CONFIDENTIAL TREATMENT REQUESTED] at its Vacaville facility. The capital costs
incurred by Chiron for the scale-up activities shall not be an Allowable Expense
(except to the extent depreciation charges are included as a Cost). Chiron shall
take such other steps as may be commercially reasonable so that the Product
produced at the Chiron Facility is acceptable for purposes of obtaining
Regulatory Approvals in the Major Markets in accordance with the Development
Plans.
(d) CEPHALON FACILITY. Chiron and Cephalon will use the Cephalon
Facility to supply IGF-1 for clinical supplies, as described in paragraph
(b), and may use the Cephalon Facility as the Alternate Facility pursuant to
Section 4.5 hereof. Chiron and Cephalon also will discuss using the Cephalon
Facility to manufacture products of Chiron (other than Products) or, to the
extent determined by the Management Committee to be cost-effective, other
Products, provided that neither party is obligated to enter into an agreement
to use the Cephalon Facility for any such purposes.
SECTION 3.3 REGULATORY APPROVALS.
(a) ESTABLISHMENT LICENSES. A Collaborator who supplies a Product
to the Collaboration will be responsible for complying with all establishment
registration requirements and obtaining all other applicable approvals
required for the production of Products at the applicable manufacturing
facility (collectively, "ELAs").
(b) REGULATORY AND PRICING APPROVALS. It is intended that all
Regulatory Approvals and Pricing Approvals relating to Products in the Field
within the Major Markets will be owned by the Collaboration and will be
registered in the name of the JV, unless otherwise required by law, and the
JV shall be organized to permit such ownership. INDs and other pre-market
clearances related to a Product shall be owned by the party conducting the
clinical trials of the Product in the Field, unless otherwise required by
law. To the extent that any INDs or other premarketing clearances or
approvals related to any of the Products in the Field within the Major Markets
are registered in the name of either Collaborator, such Collaborator will take
such actions permitted by law as maybe necessary to transfer such clearances
and approvals to the JV and otherwise will exercise its rights under all such
clearances and approvals in a manner consistent with this Agreement.
(c) DILIGENCE. Each Collaborator shall use all commercially
reasonable efforts, commensurate with those efforts used for its other
products of similar potential and consistent with its obligations under the
Development Plans, to diligently obtain the approvals it is responsible for
under the Development
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Plans. Notwithstanding the foregoing, each Collaborator acknowledges that
there can be no assurance that any ELA, Regulatory Approval or Pricing
Approval will be obtained for a Product in any Major Market.
SECTION 3.4 BALANCING OF DEVELOPMENT COSTS.
(a) BALANCING. The parties deem their initial contribution of
technology to the Collaboration with respect to IGF-1 to be of equal value.
The parties intend that the Allowable Expenses funded by each of them to
manufacture and develop Products in the Major Markets during the period
between October 1, 1993 and the Commercialization Date will be equal as of
the Commercialization Date.
(i) Each party shall fund its own Allowable Expenses under the
Development Plans through December 31, 1994 or, if later, the date when a
Collaborator has incurred an aggregate of $20 million in Allowable Expenses
under the Development Plans; provided, however, that prior to that date
either Collaborator may, but shall not be required to, reimburse the other
Collaborator for any deficiency in the equal funding of Allowable Expenses,
bearing interest at the per annum rate equal to the greater of the Prime
Rate as reported in the BLOOMBERG FINANCIAL MARKETS, COMMODITIES & NEWS (or
any mutually acceptable successor thereto) or the rate of interest imputed
for the purposes of Federal income taxes (as such, the "Balancing Rate") on
the amount of such deficiency as calculated as of the end of each Calendar
Quarter; but in no event shall the Balancing Rate exceed the maximum
interest rate allowed by applicable law.
(ii) From and after the later of December 31, 1994 or the date when
one of the Collaborators has funded an aggregate of $20 million in Allowable
Expenses under the Development Plans, the other party shall reimburse such
party for 100% of the Allowable Expenses funded thereafter by such party,
plus interest at the Balancing Rate on the amount of such deficiency as
calculated as of the end of each Calendar Quarter for the period of the
deficiency, until the aggregate Allowable Expenses (excluding interest)
funded by both parties since October 1, 1993 are shared equally (i.e.,
balanced). Once the aggregate Allowable Expenses have been balanced, each
party shall be responsible for funding 50% of the aggregate Allowable
Expenses incurred thereafter by the parties. The adjustments for Allowable
Expenses shall be made on a quarterly basis under Section 6.5(b) hereof.
(iii) If the Commercialization Date occurs before the Allowable
Expenses incurred under the Development Plans are balanced in full, the
balancing shall continue under
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clause (ii) for such expenses in addition to any balancing required under
Section 6.2(a) hereof.
(iv) Notwithstanding anything to the contrary in this Section
3.4, if the Agreement is terminated for any reason before the Allowable
Expenses are balanced in full under clauses (i) or (ii) or Section 6.2(a),
then there shall be no balancing required except as may occur under Section
16.5(a).
ARTICLE 4 - COMMERCIALIZATION ACTIVITIES IN MAJOR MARKETS
SECTION 4.1 MARKETING STRATEGY IN MAJOR MARKETS. The Management
Committee shall establish a Marketing Committee which shall be responsible
for developing a marketing strategy for each Product on a country-by-country
basis within the Major Markets. The marketing strategy for each year shall be
included in a marketing plan that is approved by the Management Committee (as
so approved, a "Marketing Plan"). Each Collaborator shall appoint 50% of the
permanent and alternate members of the Marketing Committee. Any action or
decision by the Marketing Committee must be authorized by the approval of a
majority of each party's designated members on the committee, unless
otherwise specified in this Agreement. If the Marketing Committee can not
agree on a particular matter, the matter shall be submitted for resolution to
the Management Committee. If the Management Committee can not agree on a
particular matter, the matter shall be submitted for resolution in accordance
with Article 15 hereof.
Without limiting the Marketing Committee's functions, the Marketing
Committee shall, subject to the Management Committee's approval of the
Marketing Plan and subject to Section 4.6:
(i) select the Trademark and the form of label, package insert
and packaging for each Product in each Major Market, subject to Section 9.7
hereof;
(ii) determine the pricing and reimbursement strategy for each
Product in each Major Market;
(iii) coordinate pre-launch activities for Products in the
Major Markets, including symposia and other marketing efforts;
(iv) establish the schedule for Product launch in each Major
Market;
(v) establish anticipated sales targets for each Product in
each Major Market;
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(vi) identify the estimated capacity of Chiron and Cephalon
(if applicable), to be used for the production of Products containing IGF-1
pursuant to Section 4.5(b).
SECTION 4.2 RESPONSIBILITIES OF THE PARTIES.
(a) ALLOCATION OF RESPONSIBILITIES. The Marketing Plan shall
identify the responsibilities of each Collaborator (or its third party
subcontractors) in the promotion, marketing and distribution of Products in
the Major Markets. In determining the appropriate allocation of
responsibilities, the objective of the Marketing Committee is to maximize the
efficiency and effectiveness of the commercialization of the Products in the
Major Markets. Except as provided in this Article 4 or as otherwise
determined by the Management Committee, Chiron will be responsible for
marketing the Products in the Major Markets consistent with the Marketing
Plan and will perform all distribution functions related to the Products,
including, without limitation, distributor and wholesaler contracts,
warehousing, order taking and processing, delivery, invoicing, collections and
returns. However, the parties understand that (i) pursuant to the CIBA
Agreement, CIBA has a right of first refusal under certain circumstances to
sell or promote (including copromotion of) Products containing IGF-1 in the
Territory, and (ii) Cephalon has the exclusive right to detail Products
directly to neurologists in the Major Markets. The Management Committee shall
determine whether a third party marketing arrangement is appropriate in any
country or countries in the Major Markets and its approval shall be required
with respect to the terms of any selling or promotion arrangement with CIBA
on behalf of the JV, which arrangement shall be consistent with the terms of
this Agreement; the Management Committee's approval shall not be withheld
except on the grounds that the agreement is commercially unreasonable.
(b) DILIGENCE. To the extent a Collaborator is responsible for any
of the promotion, marketing or distribution of Products in the Major Markets,
it shall perform such activities using commercially reasonable efforts,
commensurate with those efforts used for its other products of similar
potential and consistent with its obligations under the applicable Marketing
Plans.
(c) EXPANSION OF RIGHTS.
(i) Cephalon shall have the right (but not the obligation) to
detail Products directly to all purchasers in a country in the Major Markets
if at any time during the term of this Agreement (A) Chiron, directly or
indirectly, participates in the marketing or sale of any product (other than
a product containing a Compound) that is approved for the same indication as
a Product marketed or sold in that country by Chiron on behalf
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of the Collaboration, and (B) Chiron has failed to diligently market the
Product under Section 4.2(b) above in that country. The election by Cephalon
to expand its rights to detail Products shall not affect Chiron's rights
under the terms of this Agreement.
(ii) Chiron shall have the right (but not the obligation) to
sell Products directly to neurologists in a country in the Major Markets if
at any time during the term of this Agreement (A) Cephalon, directly or
indirectly, participates in the marketing or sale of any product (other than
a product containing a Compound) that is approved for the same indication as
a Product detailed in that country by Cephalon on behalf of the
Collaboration, and (B) Cephalon has failed to diligently detail the Product
under Section 4.2(b) above in that country. The election by Chiron to expand
its rights to market Products shall not affect Cephalon's rights under the
terms of this Agreement.
(d) ALLOWABLE EXPENSES. In no event shall the Allowable Expenses
related to a detailing, selling or marketing activity exceed the Costs of the
most cost-effective alternative for the Product, as determined by the
Management Committee. The difference, if any, between the Costs of a
Collaborator permitted as an Allowable Expense and its actual costs shall be
the responsibility of that Collaborator.
SECTION 4.3 COMMERCIALIZATION OF PRODUCTS. The parties will explore and
implement, to the extent feasible, an arrangement that will permit each
Collaborator to report an approximately equal amount of Net Sales of Products
in the Major Markets for each accounting period, in accordance with generally
accepted accounting principles. Such arrangement, for example, could involve
dividing the sales markets for Products on a geographic basis.
SECTION 4.4 LABELLING. Subject to Section 4.6, the label, package
insert, packaging, advertising and promotional materials for each Product
shall be approved by the Management Committee. All such materials shall
identify the names of both Collaborators, unless prohibited by applicable
law.
SECTION 4.5 MANUFACTURE OF COMMERCIAL SUPPLIES OF PRODUCTS.
(a) GENERAL. Except as otherwise provided in this Section 4.5, the
Collaboration shall obtain all of its requirements for Products from Chiron.
It is expected that Chiron will manufacture the commercial supplies of
Products containing Compounds other than IGF-1. It is expected that Chiron
will use its Vacaville Facility and Cephalon will use the Cephalon Facility
for the production of commercial supplies of Products containing IGF-1 to the
extent contemplated under paragraph (b) below. Each of the Collaborators, to
the extent that it is manufacturing Products for the Collaboration, shall
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use commercially reasonable efforts to manufacture and supply the finished
Products for commercial purposes of the Collaboration in a cost-effective
manner and in accordance with the terms of this Agreement and a supplemental
manufacturing agreement to be entered into by the parties consistent with the
terms of this Section 4.5.
(b) ALLOCATION OF CAPACITY FOR PRODUCTS CONTAINING IGF-1. Chiron will
use commercially reasonable efforts, including the making of capital
investments, to scale-up and expand the Vacaville Facility to up to
[CONFIDENTIAL TREATMENT REQUESTED] capacity to produce GMP Grade IGF-1 in
quantities sufficient for the Collaboration's commercial purposes as specified
in the Marketing Plans. At the time of the initial determination by the
Management Committee that the [CONFIDENTIAL TREATMENT REQUESTED] capacity of
the Vacaville Facility is not adequate to meet the forseeable requirements of
the Collaboration, Cephalon may elect to use the Cephalon Facility as an
Alternate Facility to provide the additional increments of capacity, not to
exceed [CONFIDENTIAL TREATMENT REQUESTED] of capacity in the aggregate. Any
such election must be made promptly by Cephalon, but no later than thirty (30)
days after the Management Committee's determination is made. In such event,
Cephalon will use commercially reasonable efforts, including the making of
capital investments, to scale-up and expand its manufacturing facility in
Beltsville, Maryland to provide GMP Grade IGF-1 for such purpose. In the event
that the IGF-1 Product requirements of the Collaboration exceed the allocated
manufacturing capacity at the Chiron Facility and the Cephalon Facility, then
Chiron shall use commercially reasonable efforts to expand its Vacaville
Facility or another Chiron facility to produce quantities of Products
sufficient for the Collaboration's commercial purposes as specified in the
Marketing Plans. The schedule for meeting commercial scale capacity for the
Chiron Facility and the Cephalon Facility will be determined by the Management
Committee, taking into account the quantities of IGF-1 required by the
Collaboration, the anticipated regulatory schedule and the time and resources
required to complete additional capital improvements. Each Collaborator shall
take such other steps as may be commercially reasonable so that the Product
produced at its facility or facilities meets the projected shipment schedules
under the applicable Marketing Plan.
(c) EXCESS MANUFACTURING CAPACITY. If the dedicated manufacturing
capacity for the Products at the Chiron Facility and the manufacturing
capacity at the Cephalon Facility as approved in the Marketing Plan is
greater than the actual demand from the Products, then the supply requirements
for the Products shall be allocated between the Chiron Facility and the
Cephalon Facility as determined by the Management Committee.
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(d) SUPPLY SHORTAGES AND INTERRUPTIONS. If the manufacturing capacity
at the Chiron Facility and the Cephalon Facility which is allocated to the
manufacture of the Products under the applicable Marketing Plan is not
adequate to meet the market demand for a Product, each Collaborator will
allocate its other manufacturing capacity, if any, which is used to
manufacture the Compound contained in such Product for the production of such
Product in order to supply such Product in an amount equal to the lesser of
(i) the Product quantities allocated to such Collaborator as set forth in the
applicable Marketing Plan or (ii) such Collaborator's percentage of the
Product supply as set forth in the Marketing Plan multiplied by the actual
market demand for such Product. If a force majeure event under Section 17.3
affects the supply of a Product from the capacity allocated to a Collaborator
under a Marketing Plan, the Collaborator may allocate such capacity ratably
between the Collaboration's requirements and any supply obligations of the
Collaborator to a third party. If the Collaborators cannot satisfy their
obligations to make a Product under this Agreement for a period of sixty (60)
consecutive days, including any failure caused by a force majeure event under
Section 17.3 hereof, the Management Committee shall designate a manufacturer
(which may be a Collaborator) to make the Product until the Collaborators
are able to resume supply of the Products under the terms of this Agreement.
(e) COST-EFFECTIVENESS. The Management Committee will be responsible
for reviewing the cost-effectiveness of the supply of each Product and to
determine the amount of the manufacturing costs of each Collaborator that
will be permitted as an Allowable Expense. [CONFIDENTIAL TREATMENT REQUESTED]
In reviewing the cost-effectiveness of the supply of each Product, the
Management Committee may compare the Costs of manufacturing a Product at the
Chiron Facility and at the Cephalon Facility. If the per unit cost of
manufacturing a Product is higher at one of these facilities, the Management
Committee shall review the cost-effectiveness of such manufacturing and shall
determine the amount of the manufacturing costs that will be permitted as an
Allowable Expense; provided, however, that in considering the cost-
effectiveness of the manufacturing and the Costs permitted as Allowable
Expenses, the Management Committee shall recognize that a reasonable difference
in the costs of manufacturing at the Chiron Facility and the Cephalon Facility
is to be expected in relation to the costs and benefits of maintaining an
Alternative Facility, and is permitted as an Allowable Expense.
(f) PRODUCT QUALITY. Each Collaborator agrees that each shipment of the
Products manufactured by it will conform to the applicable Specifications and
will be made, stored, packaged,
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labeled and controlled by it in accordance with the process and procedures
contained in the applicable Regulatory Standards. Neither Collaborator will
modify any process or procedure used in the manufacture of a Product without
notifying the Management Committee and allowing the Management Committee time
to file any required notices with the applicable regulatory authorities and
obtain any regulatory approvals required in connection with the modification.
EXCEPT AS EXPRESSLY SET FORTH IN THE PRECEDING SENTENCE, NEITHER
COLLABORATOR MAKES ANY EXPRESS OR IMPLIED WARRANTIES, STATUTORY OR OTHERWISE,
CONCERNING THE PRODUCTS. SPECIFICALLY, BUT WITHOUT LIMITING THE FOREGOING,
NEITHER COLLABORATOR MAKES ANY EXPRESS OR IMPLIED WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE, QUALITY OR
USEFULNESS OF THE PRODUCTS.
(g) FACILITY AUDIT AND INSPECTIONS. A Collaborator manufacturing
Products shall, upon reasonable advance notice, permit the other Collaborator
or any other authorized representative of the Collaboration to audit the
supplying Collaborator's manufacturing process and the manufacturing,
production and control records for the Products. Any such inspection shall be
conducted subject to the confidentiality obligations under this Agreement.
The supplying Collaborator shall take appropriate actions to adopt reasonable
suggestions of the other Collaborator to correct any deficiencies identified
by such inspection or audit. To supplement this provision, the other
Collaborator also may make arrangements, at its cost and expense (which
shall not be an Allowable Expense), to have one of its employees located on
the premises of the Chiron Facility or the Alternate Facility, as the case
may be, to participate in the monitoring of Product manufacture.
(h) DEPOSIT OF BIOLOGICAL MATERIALS. Each Collaborator shall deposit
with a mutually agreeable depository (such as the ATCC), upon terms customary
in the industry, all biological materials used in its manufacturing process,
and shall provide all manufacturing information required to enable a third
party to assume the manufacturing of Products under paragraph (e) above or
Section 16.5 hereof.
SECTION 4.6 ACTIVITIES OF CHIRON OUTSIDE THE FIELD.
(a) Cephalon recognizes that Chiron has development programs, and in the
future may initiate development programs, with respect to the Compounds for
indications outside the Field (a "Chiron Indication Product"). Nothing in
this Agreement shall be construed to limit such rights as Chiron may
otherwise have to develop or commercialize a Chiron Indication Product.
Except as provided in this Article 4.6, all aspects of development and
commercialization for Chiron Indication Products including, without
limitation, clinical development, regulatory strategy and filings, marketing
strategy and tactics, including pricing, may
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be determined solely by Chiron. Without limiting the generality of the
foregoing, for example, Chiron may determine the contents of labelling and
package inserts for any Chiron Indication Product and may determine the
prices at which any such product will be sold, even if the Chiron Indication
Product is identical to a Product (other than with respect to labelling and
package inserts). Chiron may make such determinations in its discretion
notwithstanding that such determinations may effect the corresponding aspect
of the Collaboration's development and commercialization of any Product that
is based upon the same Compound in a manner that may or may not be in the
best interest of the Collaboration.
(b) Notwithstanding (a) above, Chiron agrees to meet and confer in
good faith with Cephalon and consider any recommendation Cephalon may make
with respect to any action by Chiron with respect to Chiron Indication
Products that Cephalon reasonably believes may have any material effects upon
the development or commercialization of Products. Further, to the extent that
any aspect of the development or commercialization of a Chiron Indication
Product is related solely to the corresponding aspect of a Product approved
for sale in the Field based upon the same Compound, Chiron shall take
reasonable steps to conform such aspect of the Chiron Indication Product to
the decisions of the Management Committee regarding the corresponding aspect
of such Product. If a Collaborator is developing a product containing a
Compound for commercialization outside the Field, the Collaborators will use
commercially reasonable efforts to design the Collaboration's Product so that
it would be differentiated from such product.
To the extent that a Chiron Indication Product and a Product
based upon the same Compound are differentiated such that a decision by
Chiron with respect to an aspect of the Chiron Indication Product does not
determine a corresponding aspect of the Product, Chiron shall take reasonable
steps to preserve the differentiating aspect of the Chiron Indication Product
so as to facilitate the implementation of decisions of the Management
Committee regarding the corresponding aspect of the Product.
(c) Any Chiron Indication Product may be marketed under a
tradename, tradedress and trademark chosen by, owned by and registered by
Chiron. If Chiron elects to use the tradename, tradedress and trademark owned
by or registered to the JV for a product that is both a Product and a Chiron
Indication Product, the JV shall thereupon hold the trademark, tradedress
and/or tradename for the benefit of both Chiron and the Collaboration and
any goodwill related to the use thereof by the Parties within the Field shall
accrue to the JV and any goodwill related to the use thereof by Chiron
outside the Field shall accrue to the benefit of Chiron. Conversely, if the
JV elects to use a tradename, tradedress and/or trademark owned and
registered by
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Chiron with respect to such product, Chiron shall hold the trademark,
tradedress and/or tradename for the benefit of both Chiron and the
Collaboration and any goodwill related to the use thereof by the Parties
within the Field shall accrue to the JV and by Chiron outside the Field shall
accrue to the benefit of Chiron.
If a Chiron Indication Product has received Regulatory Approval
in the Territory prior to the receipt by the Collaboration of Regulatory
Approval of a Product containing the same Compound and Chiron reasonably
determines after consultation with the Management Committee that the Product
is not substantially differentiated from a Chiron Indication Product, Chiron
may elect to require the Collaboration to market such Product under the same
tradename, tradedress or trademark as is used in connection with such Chiron
Indication Product. If a Product has received Regulatory Approval in the
Territory prior to the receipt by Chiron of Regulatory Approval of a Chiron
Indication Product containing the same Compound, the Collaboration may
continue to use the tradename, tradedress or trademark approved by the
Management Committee notwithstanding the subsequent approval of such Chiron
Indication Product.
ARTICLE 5 - LICENSES
SECTION 5.1 CROSS-LICENSES PRIOR TO FORMATION OF JV.
(a) PATENT RIGHTS. Cephalon hereby grants to Chiron a
royalty-free, nonexclusive license or sublicense in and to the patent rights
included in the Cephalon Technology for use in the Field to develop and use
Products in the Territory in accordance with the Development Plans. Chiron
hereby grants to Cephalon a royalty-free, nonexclusive license or sublicense
in and to the patent rights included in the Chiron Technology for use in the
Field to develop and use Products in the Territory in accordance with the
Development Plans. The cross-licenses in this clause (a) shall terminate
upon the effectiveness of the licenses in Sections 5.2 and 5.3.
(b) PERPETUAL KNOW-HOW LICENSES. Subject to the restrictions on the
use of clinical data set forth in Section 3.1(e), Cephalon hereby grants to
Chiron a perpetual, nonexclusive, royalty-free license (except for the
royalty payable to the JV under Section 8.1 hereof) to all Technical
Information included in the Cephalon Technology in the Territory, for any use
by Chiron, whether inside or outside the Field. Subject to Section 3.1(e) and
7.4, Chiron hereby grants to Cephalon a perpetual, nonexclusive, royalty-free
license or sublicense (except for the royalty payable to the Chiron under
Section 6.4 hereof) to all Technical Information that is included
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in the Chiron Technology in the Territory, for any use by Cephalon, whether
inside or outside the Field.
SECTION 5.2 LICENSES TO JV.
(a) CEPHALON. Upon the formation of the JV, Cephalon will grant to
the JV an exclusive license in and to the Cephalon Technology for use in the
Field to develop, make, have made, use and sell Products in the Territory,
subject to the perpetual cross-licenses under Section 5.1(b).
(b) CHIRON. Upon the formation of the JV, Chiron will grant to the
JV an exclusive license in and to the Chiron Technology for use in the Field
to develop, make, have made, use and sell Products in the Territory, subject
to the perpetual cross-licenses under Section 5.1(b).
(c) JV TECHNOLOGY. All rights licensed to the JV by the
Collaborators pursuant to this Article 5, together with any invention or
discovery, whether or not patentable, made solely or jointly by a JV employee
after the Effective Date, are collectively referred to herein as the "JV
Technology".
SECTION 5.3 LICENSES FROM JV TO COLLABORATORS IN THE MAJOR MARKETS.
Effective upon the formation of the JV, the JV hereby grants to each of
Cephalon and Chiron a nonexclusive, royalty-free license, with no right to
sublicense, in and to the JV Technology, to the extent required for each
party to conduct its responsibilities in the Major Markets under this
Agreement or any Development Plan or Marketing Plan.
SECTION 5.4 LICENSE FROM JV TO CHIRON IN THE ROYALTY TERRITORY.
Effective upon the formation of the JV, the JV hereby grants to Chiron an
exclusive, worldwide right and license in and to the JV Technology to make,
have made, use and sell Products in the Royalty Territory, subject to the
royalty obligation and other terms and conditions of Article 8 hereof.
SECTION 5.5 OPTIONAL RIGHTS.
(a) SIBIA RIGHTS. Cephalon hereby grants to Chiron and the JV a
nonexclusive option to include in the license under Sections 5.1 or 5.2, as
applicable, the SIBIA Rights of Cephalon inside the Field. If Chiron or the
JV elects in writing to exercise the option inside the Field for purposes of
the Collaboration, the SIBIA Rights shall automatically become part of the
Cephalon Technology and any third party royalties payable as a result of the
use by the JV of the SIBIA Rights in the Major Markets shall be deemed a
Third Party Royalty to be paid by the JV. [CONFIDENTIAL TREATMENT REQUESTED]
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[CONFIDENTIAL TREATMENT REQUESTED] If at any time prior to Chiron's exercise
of its option Cephalon proposes to transfer or terminate any of the SIBIA
Rights, Cephalon shall provide Chiron with notice thereof, sufficiently in
advance to allow Chiron to exercise its option or otherwise obtain such rights
directly from SIBIA. If Chiron exercises its option, Cephalon shall maintain
the SIBIA Rights in accordance with the provisions of Section 5.10.
(b) CEPHALON IGF-1 TECHNOLOGY OUTSIDE THE FIELD.
Except as provided in this Section 5.5; Cephalon shall not develop or
commercialize with any third party, or license intellectual property rights
from any third party related to the development or commercialization of a
product containing IGF-1 for an indication outside the Field using Cephalon
Technology or any proprietary technology that it developed pursuant to the
Development Plans, without the prior written consent of Chiron. Cephalon
currently owns or has license rights to certain technology relating to the
use of IGF-1 for indications outside the Field ("Nonfield Indications"). All
of these Nonfield Indications and the related technology rights are
identified on Schedule VIII hereto. In addition, Cephalon may develop, in the
course of performing activities pursuant to the Development Plans or
otherwise, data which indicates that IGF-1 may have utility for an indication
outside the Field (the "Additional Nonfield Indications"). Cephalon shall
notify Chiron in writing if it develops any such data with respect to an
Additional Nonfield Indication, and such notice shall contain a summary of such
data in reasonable detail to enable Chiron to analyze the merits of the
possible utility. Cephalon hereby grants to Chiron the right to obtain from
Cephalon, exclusive rights to the technology and related Technical Information
for any of the Nonfield Indications and Additional Nonfield Indications for use
outside the Field. Chiron shall notify Cephalon if it wishes to negotiate a
transaction with respect to a Nonfield Indication or Additional Nonfield
Indication. If Chiron and Cephalon, after good faith negotiations, have failed
to reach agreement within 90 days as to the appropriate terms and fair market
compensation for such indication, the parties will submit the determination of
fair market compensation to arbitration pursuant to Section 15.2 hereof.
Notwithstanding the foregoing, Chiron may elect to have the Collaboration
obtain such rights to the Nonfield Indication or Additional Nonfield
Indication on terms mutually acceptable to Chiron and Cephalon. The parties
intend that such terms shall reflect a profit participation for Cephalon that
represents the economic equivalent of a commercially reasonable royalty and the
equal sharing by Chiron and Cephalon of future development costs
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with respect to such indication. The rights of Chiron under this Section 5.5(b)
are subject to any approvals of the CCP Board of Directors or partners
required under the applicable Cephalon Agreements. Cephalon shall use its best
efforts to obtain such approvals, if required.
SECTION 5.6 RETAINED RIGHTS. Each of Chiron and Cephalon reserves the
right to use, respectively, the Chiron Technology and the Cephalon
Technology, for any purpose whatsoever outside the Field and/or outside the
Territory, without liability to the other party or to the JV, except as may
be otherwise specified in Sections 5.5(b), and 6.2(b) and 6.3 hereof.
SECTION 5.7 PRIOR RIGHTS. The rights granted or to be granted by
Cephalon to Chiron and the JV under this Agreement are subject in all
respects to the prior rights of third parties under the Cephalon Agreements.
The rights granted or to be granted by Chiron to Cephalon and the JV under
this Agreement are subject in all respects to the prior rights of third
parties under the Chiron Agreements.
SECTION 5.8 INVENTIONS. All inventions and discoveries resulting from
the Collaboration, whether or not patentable, shall be owned by the
Collaborator making the invention or discovery. All Joint Technology shall be
owned by the JV or, in the absence of the JV, by the Collaborators jointly.
SECTION 5.9 NEW TECHNOLOGIES.
(a) THIRD-PARTY RIGHTS. The Management Committee may acquire from
third parties, if commercially reasonable, such rights to new technology in
the Field as are necessary or desirable for the JV, directly or indirectly,
to make, use and sell Products. The JV (and not the Collaborators
individually) shall be responsible for any payments or royalties for such
rights attributable to the sale of Products in the Major Markets owing to a
third party under an agreement approved by the Management Committee.
(b) ADDITIONAL TECHNOLOGY OF COLLABORATORS. The parties
contemplate that Chiron's biologically-active small molecules and its
proprietary molecular diversity technology and other proprietary Chiron
compounds other than the Chiron Products may be added to the Collaboration,
upon terms to be mutually agreed to by the Collaborators. Similarly, Cephalon
and Chiron may from time to time agree in writing to include within the scope
of this Agreement any other composition, product or technology of a
Collaborator, upon terms to be mutually agreed to by the Collaborators. Unless
and until an agreement is executed providing for the addition of technology to
the Collaboration, the Collaborator shall be free to develop or dispose of such
technology in any manner it sees fit.
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SECTION 5.10 MAINTENANCE OF TECHNOLOGY. In addition to its
obligations under Section 9.1, Cephalon and Chiron shall notify the other
Collaborator before allowing any intellectual property right included in the
Cephalon Technology or the Chiron Technology, as applicable, the loss of
which would have a material adverse effect on the business of the
Collaboration to lapse, expire or terminate before its stated expiration or
termination date, sufficiently in advance to allow the other Collaborator to
seek to obtain the rights to such technology. Each Collaborator shall use
all commercially reasonable efforts to maintain in full force and effect any
license or other agreement pursuant to which it derives rights included in
the Cephalon Technology or the Chiron Technology, as the case may be, the
loss of which would have a material adverse effect on the business of the
Collaboration and shall promptly notify the other if it receives notice or
otherwise becomes aware of any default under any such agreement. Without
limiting the foregoing, neither Collaborator shall amend or modify any such
third-party agreement in a manner that would limit the benefits or expand the
obligations of the Collaboration with respect to any such rights without the
prior consent of the other Collaborator, which consent shall not be unreasonably
withheld. Neither Collaborator shall transfer or assign to an unaffiliated party
any such third party agreement or any other intellectual property right that is
licensed to the other Collaborator or the JV under this Agreement, without the
prior approval of the Management Committee.
SECTION 5.11 SUBLICENSING OF TECHNOLOGY. Cephalon may sublicense its
rights under Section 5.1(b) to its licensees or sublicensees to the extent
required by the corresponding Cephalon Agreement, and Chiron may sublicense
its rights to its licensees or sublicensees. The JV may sublicense all or
part of the JV Technology to one or more third parties, subject to the
execution by the third party of a sublicense agreement satisfactory to the
Management Committee.
SECTION 5.12 DISCLOSURE OF TECHNOLOGY. Promptly after the Effective
Date and from time to time thereafter during the term of this Agreement, each
Collaborator shall promptly disclose to the other the Technical Information
which becomes known to it to the extent licensed to the other Collaborator or
the JV under this Article 5. In addition, each Collaborator shall promptly
disclose to the other Collaborator, in writing, any invention
or discovery included in its license to the other Collaborator of the
Cephalon Technology or Chiron Technology, as the case may be, under Article 5.
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ARTICLE 6 - COMPENSATION IN MAJOR MARKETS
SECTION 6.1 EQUAL SHARING OF OPERATING PROFITS AND LOSSES. The
Operating Profits and Operating Losses shall be shared equally by Cephalon
and Chiron, except for the special allocation described in Section 6.2(a)
hereof.
SECTION 6.2 SPECIAL ALLOCATIONS.
(a) BALANCING OF COSTS AFTER COMMERCIALIZATION DATE. To the extent
the Allowable Expenses of the Collaborators are not equally funded as of the
Commercialization Date, the Collaborator who funded the greater share of
Allowable Expenses shall be entitled to receive from sales of Products in the
Major Markets, prior to the allocation of Operating Profits under Section
6.1, a special allocation equal to [CONFIDENTIAL TREATMENT REQUESTED] plus
[CONFIDENTIAL TREATMENT REQUESTED]. These credits shall be applied until
the Collaborator has received 100% of its excess Allowable Expenses as of the
Commercialization Date, plus interest at the Balancing Rate (as defined in
Section 3.4) on the amount of such excess for the period of the excess amount.
(b) SALES FOR DIABETES. The parties acknowledge that sales of a
Product containing IGF-1 for diabetic neuropathy may overlap with sales of a
product containing IGF-1 for diabetes. The parties therefore agree that if an
IGF-1 Product of the JV receives Regulatory Approval for the treatment of
diabetic neuropathy or a Collaborator receives Regulatory Approval in the
Territory of another product containing IGF-1 for the treatment of diabetes,
the Collaborators will [CONFIDENTIAL TREATMENT REQUESTED] The allocation
established by the parties shall apply regardless of which indication is
approved first, and shall apply in lieu of any provisions of Section 6.3
that might otherwise be applicable.
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SECTION 6.3 OFF-LABEL SALES IN THE MAJOR MARKETS.
(a) If a Product of the Collaboration receives Regulatory Approval
in the Field in a country in the Major Markets prior to the receipt by Chiron
(or its licensee or joint development partner) of Regulatory Approval in such
country of a product containing the same Compound for an indication outside
the Field then all sales of such Product used for an indication (whether
inside or outside the Field) in that country shall be included in the Net
Sales used to calculate Operating Profits and, if applicable, any royalty
payable to Chiron pursuant to Section 6.4 with respect to such country;
provided that all costs and expenses associated with such Net Sales shall be
included as an Allowable Expense. Notwithstanding the foregoing, [CONFIDENTIAL
TREATMENT REQUESTED] shall be excluded from the Net Sales used to calculate
Operating Profits and, if applicable, any royalty payable to Chiron pursuant
to Section 6.4 and in lieu thereof Chiron shall pay to the JV a royalty equal to
[CONFIDENTIAL TREATMENT REQUESTED]; provided that all costs and expenses
associated with such excluded Net Sales shall not be included as an Allowable
Expense. [CONFIDENTIAL TREATMENT REQUESTED]
(b) Upon the receipt by Chiron (or its licensee or joint
development partner) of Regulatory Approval of a product outside the Field
containing the same Compound as a Product, in a country in the Major Markets,
all sales thereafter of the Product for use in any indication outside the
Field in such country (according to market reports accepted in the industry)
shall not be counted for purposes of calculating, with respect to such
country (i) Operating Profits, (ii) any royalty payable to the JV under
Section 6.3(a) above, or (iii) any royalty payable to Chiron pursuant to
Section 6.4. All Costs associated with such sales shall not be permitted as
Allowable Expenses for any purpose.
SECTION 6.4 ROYALTIES TO CHIRON ON SALES OF CHIRON PRODUCTS.
(a) BASE ROYALTY. The JV shall pay to Chiron a reasonable royalty
on Net Sales of Chiron Products in the Major Markets. The royalty rate for
each Chiron Product shall be negotiated by Cephalon and Chiron in good faith
no later than the time an application for a Regulatory Approval is submitted
in a Major Market for the corresponding Chiron Product. The royalty rate
shall be the amount a third party would be willing to pay,
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taking into consideration all relevant factors, including the value of the
technology contributed by Chiron, the market opportunity for the Chiron
Product, the availability of patent protection, the necessity of paying
royalties to third parties, and the Costs and risks incurred or to be
incurred by the Collaborators for development of the Chiron Product. The
royalty rate for Net Sales of Products in the Major Markets shall not be less
than [CONFIDENTIAL TREATMENT REQUESTED] nor more than [CONFIDENTIAL TREATMENT
REQUESTED] for a Chiron Product having Market Exclusivity (but which maximum
rate shall not be more than [CONFIDENTIAL TREATMENT REQUESTED] in the case of a
Chiron Product if the preclinical and Phase I clinical data that is provided by
Chiron is substantially sufficient to permit clinical testing of the
corresponding Product in the Field), and shall not be less than [CONFIDENTIAL
TREATMENT REQUESTED] nor more than [CONFIDENTIAL TREATMENT REQUESTED] for other
Chiron Products.
(b) ADJUSTMENTS TO ROYALTY
(i) The royalty payable under Section 6.4(a) for a Chiron
Product with Market Exclusivity in a particular country in the Major Markets
shall be reduced by an equitable amount to be determined by the Management
Committee with respect to Net Sales of such Chiron Product in the country if
a product containing the same Compound either (A) is being sold by a third
party (other than third parties having rights through a Collaborator) in that
country for the same indication, or (B) is approved for an indication in that
country covered by the patent used to establish Market Exclusivity for the
indication in the same country and there is no other basis for establishing
Market Exclusivity as to the Chiron Product indication in that country.
(ii) The royalty payable under Section 6.4(a) for a Chiron
Product without Market Exclusivity in a particular country in the Major
Markets shall be increased to the rate used in a country where the Chiron
Product has Market Exclusivity, if Chiron can reasonably demonstrate that
even without Market Exclusivity, there is no significant competition for the
Chiron Product with respect to the indication for which the Chiron Product
received Regulatory Approval in the country. For purposes of this provision,
"significant competition" means sales of a product by a third party or third
parties (other than third parties having rights through a Collaborator)
constitute more [CONFIDENTIAL TREATMENT REQUESTED]
(iii) If a royalty rate determined pursuant to Section 6.4(a)
is such that the JV's profit percentage from sales of Chiron Products in the
Major Markets is greater than or less than the percentage anticipated by the
parties as of the Effective Date, Cephalon and Chiron shall meet and confer
as to whether the royalty rates should be increased or decreased to
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provide the JV and Chiron with a fair allocation of the economic benefits in
the Major Markets. Any such adjustment may be made on a country-by-country
and Product-by-Product basis.
SECTION 6.5 CALCULATION OF OPERATING PROFITS.
(a) PRIOR TO FORMATION OF JV.
(i) REPORTING. Within twenty-one (21) days after the end of each
month after the Effective Date until the formation of the JV, Cephalon shall
submit to Chiron a report detailing all Allowable Expenses funded by Cephalon
for the applicable month. Within thirty (30) business days after the end of
a Calendar Quarter, Cephalon shall also submit to Chiron a final report
detailing all Allowable Expenses funded by Cephalon for the applicable
quarter.
(ii) STATEMENT OF ALLOWABLE EXPENSES. Based on the reports of
Cephalon, Chiron shall prepare a pro forma statement of its Allowable
Expenses, combined Allowable Expenses and an inception-to-date report of each
Collaborator's Allowable Expenses which it shall send to Cephalon no later
than forty (40) days after the end of the applicable month. In addition,
based on the quarterly reports of Cephalon, Chiron shall prepare a final pro
forma statement of combined Allowable Expenses and a final inception-to-date
report of each Collaborator's Allowable Expenses for the Cephalon Quarter,
which it shall send to Cephalon no later than sixty (60) days after the end
of the Calendar Quarter. Within fifteen (15) days after receiving the
monthly report, the Collaborators shall make any payments, if required, to
accomplish balancing under Section 3.4 (a) (ii) hereof.
(iii) CONFIRMATION. Each Collaborator's chief financial officer
shall confirm on an annual basis that the quarterly reports furnished during
the year were prepared in accordance with the accounting principles and
methodology authorized pursuant to Section 2.3 (c) hereof.
(b) JV REPORTING. Prior to the formation of the JV, the Management
Committee will determine the appropriate reporting requirements and
procedures, including the timing and method of calculating the preliminary
and the final Operating Profits of the JV, the reporting of Net Sales in the
Royalty Territory and the manner in which payments or refunds of overpayments
will be made, but in no event shall such payments be made less frequently
than sixty (60) days after each Calendar Quarter. The reporting requirements
and procedures of the JV will be based on the approved Marketing Plans. The
Management Committee shall review the reporting requirements and procedures
of the JV when appropriate in light of changes to the Marketing Plans,
changes in or financial statement reporting requirements. Notwithstanding
the foregoing, the Collaborators agree that Chiron will be responsible for
compiling the financial statements
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of the JV and, if the JV is organized as a partnership, shall be the Tax
Partner for federal income tax purposes.
PART III - ACTIVITIES IN ROYALTY TERRITORY
ARTICLE 7 - DEVELOPMENT AND COMMERCIALIZATION ACTIVITIES IN
ROYALTY TERRITORY
SECTION 7.1 DEVELOPMENT AND COMMERCIALIZATION RESPONSIBILITIES. Chiron
shall be responsible for conducting, at its own cost and expense, all
activities relating to the development, manufacture and marketing of the
Products in the Royalty Territory including, without limitation the
establishment of a sales force or distribution network and the promotion and
sale of Products. All Regulatory Approvals and Pricing Approvals in the
Royalty Territory shall be in the name of Chiron.
SECTION 7.2 COORDINATION WITH COLLABORATION.
(a) Chiron shall consult with the Development and Marketing Committees
with respect to the following activities:
(i) the preparation of its development and marketing plans for the
Products in the Royalty Territory;
(ii) the preparation of Product labelling and promotional materials
to be used with Products in the Royalty Territory;
(iii) the designation of Trademarks for the Products in the Royalty
Territory; and
(iv) the choice of supplier of the Products to be developed or sold
in the Royalty Territory.
Subject to Section 4.6, the plans for these activities will be submitted to
the Management Committee for review and approval reasonably in advance of the
specified activity, which approval shall not be withheld except on the
grounds that the proposal is commercially unreasonable. The members of the
Management Committee in reviewing and approving the proposed activities of
Chiron shall act in the interests of the Collaboration and not with regard to
the individual interests of Chiron or Cephalon. Chiron shall keep the
Management Committee informed of its progress under its development and
marketing plans in the Royalty Territory.
(b) Chiron shall not sublicense or enter into any comarketing,
copromotion or similar arrangement in the Royalty Territory without the prior
approval of the Management Committee
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(which consent shall not be unreasonably withheld), excluding wholesaling,
distribution and consignment arrangements, where the third party does not
market or promote the Products. Nothwithstanding the foregoing, CIBA is
hereby approved for purposes of marketing Products in the Royalty Territory,
upon terms to be approved by the Management Committee (which approval shall
not be withheld except on the grounds that the terms are commercially
unreasonable).
SECTION 7.3 DILIGENCE IN COMMERCIALIZATION OF PRODUCTS. Chiron shall use
commercially reasonable efforts, commensurate with those efforts used for its
other products of similar potential and consistent with its obligations under
the development and marketing plans approved under Section 7.2 hereof, to
commercialize the products in the Royalty Territory and to obtain all
Regulatory Approvals and Pricing Approvals needed in the Royalty Territory
for such purposes.
SECTION 7.4 OWNERSHIP OF DATA. All clinical data developed by Chiron for
purposes of Regulatory Approvals in the Royalty Territory shall be owned by
Chiron, but may be used in the Field and Territory by Chiron, Cephalon and
the JV pursuant to the licenses granted under Article 5 hereof and may be
used by Chiron outside the Field and outside the Territory without limitation.
SECTION 7.5 NO ALLOWABLE EXPENSES. None of the costs and expenses
incurred by Chiron in connection with the Royalty Territory shall be an
Allowable Expense hereunder unless expressly approved as such by the
Management Committee.
SECTION 7.6 ASSISTANCE BY THE JV. Chiron may request the assistance of the
JV or Cephalon in the development and commercialization activities related to
the Product. Any such assistance shall be provided upon mutually acceptable
terms.
SECTION 7.7 CONTINGENT CEPHALON MARKETING RIGHTS.
(a) EVENTS. Cephalon shall have the right (but not the obligation) to
detail Products in a country within the Royalty Territory if:
(i) Chiron participates, directly or indirectly, in the
marketing, sale or distribution of any product in that
country that directly competes with an indication included
in a Regulatory Approval for a Product in the same country;
and
(ii) Chiron has failed to diligently develop and commercialize
such Product under Section 7.3 hereof in that country.
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(b) PROCEDURES. Cephalon shall give Chiron written notice of the
existence of the conditions described in clause (a) above, and Chiron shall
have a period of 90 days in which to cure. If the conditions have not been
adequately cured in Cephalon's reasonable judgment by the end of such period,
Cephalon's right to detail shall be effective upon written notice from
Cephalon to Chiron at which time Cephalon shall be entitled to detail all
Products in such country on a nonexclusive basis. Cephalon shall be paid a
reasonable fee by the JV for such activities and Cephalon's costs to detail
the Products shall not be an Allowable Expense. Chiron's obligations to
compensate the JV under Article 8 shall continue as to any Products continued
to be marketed and sold by it or detailed by Cephalon, except that the
royalty payable with respect to such Net Sales shall be reduced to the rate
determined under Section 8.1(b) hereof as to any Product that Cephalon is
detailing. The election by Cephalon to detail Products in the Royalty
Territory shall not affect Chiron's rights under this Agreement.
ARTICLE 8 - ROYALTIES AND REPORTS, ETC.
SECTION 8.1 ROYALTIES. In consideration of the licenses granted to
Chiron under Section 5.4 hereof, Chiron shall pay to the JV in each country
within the Royalty Territory a royalty equal to:
(a) [CONFIDENTIAL TREATMENT REQUESTED] of the Net Sales of a Product
containing IGF-1 for a particular indication in any country where the Product
has Market Exclusivity for that indication; and
(b) [CONFIDENTIAL TREATMENT REQUESTED] of the Net Sales of a Product
containing IGF-1 for a particular indication in any country where the Product
does not have Market Exclusivity for that indication; and
(c) in the case of any Product containing a Compound other than
IGF-1, a reasonable royalty to be negotiated by the Collaborators in good
faith (which shall be not less than [CONFIDENTIAL TREATMENT REQUESTED] of Net
Sales), to be determined upon the request of either Collaborator but in no event
later than the first commercialization of a Product in the Royalty Territory.
SECTION 8.2 ROYALTY RATE ADJUSTMENTS.
(a) The royalty rate payable under Section 8.1(a) shall be reduced
by an equitable amount to be determined by the Management Committee with
respect to a Product in a country in the Royalty Territory if a product
containing the same Compound either (i) is being sold by a third party (other
than a third party having rights through a Collaborator) in that country for
the same indication, or (ii) is approved for an indication in that country
covered by the patent used to establish Market
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Exclusivity for the indication in the same country and there is no other basis
for establishing Market Exclusivity as to the Product indication in that
country.
(b) The royalty rate payable under Section 8.1(b) for a particular
country in the Royalty Territory shall be increased to the rate specified in
Section 8.1(a) with respect to a Product in such country in the Royalty
Territory if Cephalon can reasonably demonstrate that even without Market
Exclusivity, there is no significant competition for the Product in that
country with respect to the indication for which the Product received
Regulatory Approval in the country. For purposes of this provision,
"significant competition" means sales of a product by a third party or third
parties (other than third parties authorized by a Collaborator under this
Agreement) constitute more than [CONFIDENTIAL TREATMENT REQUESTED]
(c) If a royalty rate specified in Section 8.1 is such that Chiron,
after paying such royalties, would not receive a fair return on sales of the
Products because of market conditions outside of its control, Cephalon and
Chiron shall meet and confer as to whether the royalty rates should be
reduced to provide Chiron with a fair allocation of the economic
benefits in the Royalty Territory. Conversely, if the royalty rates specified
in Section 8.1 are such that the JV's share of profits from the royalties on
sales of Products in the Royalty Territory is less than the share of profits
anticipated by the parties as of the Effective Date, Cephalon and Chiron shall
meet and confer as to whether the royalty rates should be increased to
provide the JV with a fair allocation of the economic benefits in the Royalty
Territory, but in no event shall any such increase exceed a royalty rate of
[CONFIDENTIAL TREATMENT REQUESTED] of Net Sales. Any such adjustment may be made
on a country-by-country and Product-by-Product basis.
(d) The royalty rates payable by Chiron to the JV under Section
8.1 shall be subject to increase to provide Cephalon with a share of
Operating Profits of the JV that is sufficient to pay any royalty or other
compensation Cephalon may owe CCP under an Amended and Restated Product
Development Agreement dated as of August 11, 1992 (the "CCP Agreement"), in a
country within the CCP Territory. For purposes of this clause (d), the term
"CCP Territory" means the geographic area encompassed by the following
countries on the date hereof: Albania, Andorra, Bulgaria, the Commonwealth of
Independent States, Cyprus, Czechoslovakia, Gibraltar, Hungary, Iceland,
Liechtenstein, Malta, Monaco, Poland, Romania, San Marino, Turkey and
Yugoslavia. The term "CCP Territory" shall also include the geographic area
encompassed by any of the republics that were formerly part of the U.S.S.R.
and Yugoslavia, regardless of whether such republics are as of the date hereof
members of the
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Xxxxxxxxxxxx xx Xxxxxxxxxxx Xxxxxx or Yugoslavia, as applicable. Chiron and
Cephalon shall meet and confer as to whether the royalty ratees payable by
Chiron to the JV under Section 8.1 should be increased with respect to any
country or Product to provide Cephalon with a share of Operating Profits of
the JV that is sufficient to provide a fair return to Cephalon.
(e) The royalty rates under Section 8.1 also are subject to
reduction under Sections 9.2 and 9.3 hereof.
SECTION 8.3 ALLOCATIONS OF NET SALES IN THE ROYALTY TERRITORY.
(a) OFF-LABEL SALES. If a Product of the Collaboration receives
Regulatory Approval in the Royalty Territory prior to the receipt by Chiron
(or its licensee or joint development partner) of Regulatory Approval in the
Royalty Territory of a product containing the same Compound as the Product
for an indication outside the Field, then all sales of such Product used for
any indication (whether inside or outside the Field) in the Royalty Territory
shall be included in the Net Sales used to calculate the royalty payable by
Chiron pursuant to Section 8.1. Notwithstanding the foregoing, [CONFIDENTIAL
TREATMENT REQUESTED] All sales of the Product used in any indication outside
the Field (according to market reports accepted in the industry) in a country
in the Royalty Territory shall be excluded for purposes of calculating the
royalty payable by Chiron pursuant to Section 8.1 in such country when Chiron
(or its licensee or joint development partner) receives Regulatory Approval
for an indication outside the Field for such Product either in such country
itself or in any country in the Major Markets, whichever occurs first.
(b) SALES FOR DIABETES. The portion of Net Sales in any country in
the Royalty Territory that is deemed to be sales of an IGF-1 Product for
diabetic neuropathy in such country shall be determined in accordance with
Section 6.2(b).
SECTION 8.4 THIRD PARTY ROYALTIES. Chiron shall be responsible for any
royalties or other compensation owed by either Collaborator under the
agreements specified on SCHEDULE IV to any third party as a result of
Chiron's commercialization of Products in the Royalty Territory including,
without limitation, compensation payable pursuant to the CIBA Agreement and
pursuant to the SIBIA Rights. Notwithstanding the foregoing: (i) Cephalon
shall be responsible for any royalties owed by it pursuant to the CCP
Agreement, (ii) Chiron may offset royalties
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payable to certain third parties to the extent provided in Section 9.2(e),
and (iii) Chiron may include in the determination of Net Sales subject to
royalty under Section 8.1, a deduction for any royalty payable to a third
party in any country in the Royalty Territory under any license or similar
agreement that has been approved by the Management Committee under Section
5.9, but in no event shall the total deductions for such royalties reduce the
royalty payment by more than 50% in the aggregate.
SECTION 8.5 PAYMENT OF ROYALTIES. Royalties payable to the JV under
Section 8.1 shall be due within sixty (60) days after the end of the Calendar
Quarter in which Net Sales were recorded by Chiron.
SECTION 8.6 REPORTS. Unless otherwise agreed by Cephalon and Chiron,
Chiron shall deliver to the JV within sixty (60) days after the end of each
Calendar Quarter in which royalties are due a report of the chief financial
officer of Chiron, setting forth in reasonable detail the calculation of the
royalties payable to the JV for such Calendar Quarter, including the Net
Sales on a Product by Product and country-by-country basis. In addition,
within ninety (90) days after the close of each calendar year, Chiron, upon
Cephalon's request, shall cause its independent public accountants to prepare
a report confirming the procedures performed in reviewing the accuracy of the
aggregate Net Sales and calculation of royalties payable to the JV under
Section 8.1 for that calendar year. Cephalon shall reimburse Chiron for the
reasonable costs of such review.
SECTION 8.7 CURRENCY RESTRICTIONS. If Chiron is prevented from making any
royalty payment to the JV under this Agreement by virtue of restrictions on
currency conversion or repatriation under the statutes, laws, codes or
governmental regulations of the country from which the payment is to be made,
then such royalty payments may be paid by depositing them in the currency in
which accrued to the JV's account in a bank acceptable to the JV in the
country whose currency is involved.
SECTION 8.8 TAXES. All taxes, assessments and fees of any nature levied or
incurred on account of any payments accruing under this Agreement by
national, state or local governments in the Royalty Territory, will be
assumed and paid by Chiron, except taxes levied thereon as income to the JV.
If taxes payable by the JV are required to be withheld by Chiron, they will
be deducted from such payments due to the JV and will be paid by Chiron for
the account of the JV.
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PART IV - GENERAL PROVISIONS
ARTICLE 9 - INTELLECTUAL PROPERTY MATTERS
SECTION 9.1 INTELLECTUAL PROPERTY PROTECTIONS.
(a) CONTROL. Each Collaborator shall be responsible for and shall have
the right to control the prosecution, maintenance, reissue, reexamination,
renewal and extension of the patent applications, issued patents and
Trademarks included in the intellectual property in the Territory licensed by
it to the other Collaborator or to the JV pursuant to Article 5 hereof. Each
Collaborator, upon reasonable request, shall report to the Management
Committee the status of any such activities and shall furnish copies of any
correspondence, file wrappers, office actions and such other documents as the
Management Committee shall reasonably require to monitor the activities in
the Territory. If a Collaborator elects not to continue the prosecution of
any application, reissue, reexamination, renewal or extension or to pay any
maintenance fee related to any such intellectual property right, it shall
notify the Management Committee of such decision at least thirty (30) days in
advance of the due date for such action or payment, and the other
Collaborator shall have the right, but not the obligation, to assume
responsibility therefor. Cephalon shall be responsible for coordinating its
activities with CCP and Chiron shall be responsible for coordinating its
activities with CIBA.
(b) COOPERATION. Each Collaborator shall cooperate with the other
Collaborator to facilitate the activities under paragraph (a) above,
including, without limitation, executing all lawful papers and instruments
and making all rightful oaths and declarations as may be necessary in the
preparation and prosecution of the patent applications, issued patents,
Trademarks and other rights included in the JV Technology or in the transfer
of any prosecution obligations under Section 9.1(a).
(c) ALLOWABLE EXPENSES. The Costs incurred by a Collaborator under this
Section 9.1 shall be an Allowable Expense to the extent approved by the
Management Committee as attributable to the Products in the Major Markets.
The Costs incurred by a Collaborator that are attributable to the Products in
the Royalty Territory shall be borne by the Collaborator.
SECTION 9.2 DEFENSE OF INFRINGEMENT CLAIMS.
(a) NOTICE. If a claim is asserted against Chiron, Cephalon or the JV
by a third party alleging infringement of the third party's intellectual
property rights resulting from the development, manufacture, use or sale of a
Product in the
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Territory, it shall promptly notify the other parties of such claim.
(b) DEFENSE OF CLAIM. The Collaborator against whom the claim has been
made shall control the defense of a claim attributable to the Products in the
Major Markets. Chiron shall be obligated to defend Cephalon and to control
the defense of a claim asserted in the Royalty Territory.
(c) COSTS AND JUDGMENTS IN THE MAJOR MARKETS. The reasonable Costs
(including any judgments or monetary damages awarded in an action) incurred
by a Collaborator in defending an infringement claim shall be an Allowable
Expense to the extent approved by the Management Committee as attributable to
the Products in the Major Markets.
(d) COSTS AND JUDGMENTS IN THE ROYALTY TERRITORY. Chiron shall pay its
out-of-pocket costs (including attorneys' fees) of defending a claim
attributable to the Products in the Royalty Territory, except that Chiron
may apply 100% of its reasonable out-of-pocket costs actually incurred
(including reasonable attorneys' fees) as a credit against any royalty
payments payable to the JV under Section 8.1 hereof. If any damages
(excluding punitive or exemplary damages) awarded against Chiron in a
judgment or order related to such claim are stated to be compensation to the
plaintiff for lost sales, 50% of such amount, to the extent not covered by
insurance, may be offset against the royalties payable under Section 8.1. If
Chiron licenses intellectual property rights to settle such claim in a
settlement that has been approved by Cephalon, Chiron may reduce the
royalties payable under Section 8.1 by 50% of the royalty payable to the
third party.
SECTION 9.3 PROSECUTION OF THIRD PARTY INFRINGEMENTS.
(a) NOTICE. Cephalon and Chiron shall promptly give written notice to
the other party and to the Management Committee of any infringement or
possible infringement of any of the JV Technology by a third party in the
Territory.
(b) CONTROL OF PROSECUTION IN THE MAJOR MARKETS. The Collaborator
owning the infringed technology right may, at its discretion, take such steps
as it deems necessary or desirable to prosecute any such infringement
attributable to Products in the Major Markets. If the Collaborator owning the
technology right does not bring suit or take other appropriate action within
120 days after receiving notice of such claim, the JV (or the Collaborator,
if the JV so elects) shall have the right, but not the obligation, to bring
suit or take other appropriate action with respect to the infringed right.
If the right consists of a joint invention or other JV Technology not owned
solely by a
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Collaborator, the Management Committee shall determine the appropriate
procedures for handling the alleged infringement.
(c) COSTS AND RECOVERIES IN THE MAJOR MARKETS. All monetary
damages awarded in any action against a third party under paragraph (b) that
are attributable to a Product within the Major Markets shall be treated as Net
Sales of the Collaboration in the calculation of Operating Profits. The JV
may retain 100% of any recovery in any proceeding brought by it, except that
any recovery explicitly attributable to a subject matter other than the
Products shall be remitted to the Collaborator who owns the technology right
at issue.
(d) CONTROL OF PROSECUTION IN THE ROYALTY TERRITORY. The JV,
through the Management Committee, shall have the right, but not the
obligation, to control the prosecution of an infringement claim attributable
to the Products in the Royalty Territory. If within forty-five (45) days after
receiving notice of such claim, the JV informs Chiron that it declines to
prosecute any such claim, Chiron shall have the right, but not the
obligation, to bring the claim.
(e) COSTS AND RECOVERIES IN THE ROYALTY TERRITORY. The
prosecuting party shall pay its out-of-pocket costs (including attorneys'
fees) of prosecuting the claim and shall be entitled to retain any award in
such action, except that if Chiron prosecutes the claim, it shall pay the JV
a royalty under Section 8.1 as to any portion of an award it receives that is
stated to be compensation for lost sales (after deducting a proportionate share
of Chiron's legal costs and expenses attributable to the award).
SECTION 9.4 JOINDER. Any party prosecuting or defending a claim under
this Article 9 shall have the right to join the other party in such
proceeding, only if it is necessary to use the other party's name to prosecute
or defend such action; however, the prosecuting party shall indemnify the
joined party against any liabilities asserted against the joined party solely
by virtue of being named in the prosecution and independent of any conduct by
the joined party.
SECTION 9.5 SETTLEMENT OF CLAIMS. Neither Collaborator may settle a
claim described in this Article 9 without the consent of the other
Collaborator, if such settlement would impose any monetary obligation on the
JV or the other Collaborator or require the JV or the other Collaborator to
submit to an injunction or otherwise limit the JV's or the other
Collaborator's rights under this Agreement.
SECTION 9.6 COOPERATION. In conducting the defense or prosecution of
any claim described in this Article 9, Cephalon and Chiron shall consult with
and keep the Management Committee
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informed of the status of the action. Upon reasonable request, the JV and the
Collaborators shall assist the person or persons controlling the defense or
prosecution of an infringement claim, the Costs of which shall be an
Allowable Expense to the extent attributable to the Products in the Major
Markets. In addition, any Collaborator or the JV may protect its interests in
such matter by participating in the proceeding, through attorneys of its
choice, the Costs of which shall not be an Allowable Expense.
SECTION 9.7 TRADEMARK MATTERS.
(a) TRADEMARKS IN MAJOR MARKETS. Subject to Section 4.6, the
Marketing Committee shall approve the Trademarks to be used for each Product
in the Major Markets.
(b) TRADEMARKS IN ROYALTY TERRITORY. Chiron's selection of
Trademarks for Products in the Royalty Territory is subject to Section 7.2
hereof. Chiron agrees that any rights arising to it from the use of the
Trademarks in the Royalty Territory and any goodwill related thereto shall
inure to the benefit of the JV to the extent it is the same or substantially
similar to a Trademark used in the Major Markets for the corresponding
Product.
(c) TRADEMARK PROTECTIONS. Subject to Section 4.6, the Marketing
Committee shall establish procedures and restrictions on use of the
Trademarks for Products in the Territory to be observed by the JV and the
Collaborators to ensure maintenance of the Trademarks in accordance with good
trademark practice.
(d) OWNERSHIP. Subject to Section 4.6, all Trademarks for Products
in the Territory created after the Effective Date shall be deemed Joint
Technology and may be used by a Collaborator with a product containing the
corresponding Compound outside the Field or outside the Territory, subject
to the rights of Kyowa Hakko under the applicable Cephalon Agreement.
(e) NO CONTEST. To the extent permitted by applicable law,
neither Collaborator shall, during the term of this Agreement, contest the
other Collaborator's ownership of the Trademarks licensed to the JV under
this Agreement or take any action adverse to the ownership of such Trademarks
by the other Collaborator or its successors or assigns.
(f) INSPECTION RIGHTS. The JV and each Collaborator shall have
the right, upon reasonable notice and during normal business hours, to
inspect the relevant facilities of the other Collaborator to ensure
compliance by the other Collaborator with this Section 9.7. Any such
inspection shall be subject to the confidentiality obligations of the
inspecting party under Article 12 hereof.
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ARTICLE 10 - PAYMENTS AND RECORDS
SECTION 10.1 PAYMENTS.
(a) PLACE OF PAYMENT. All payments to a Collaborator or the JV
under this Agreement shall be made by wire transfer in immediately available
funds in legal currency of the United States to the account designated in
writing by each Collaborator or the JV, as applicable, from time to time.
(b) CURRENCY CONVERSION. Any amount received in a currency other
than U.S. dollars shall be converted into U.S. dollars using the average
for the month in which the amount was received of the composite conversion
rate for each business day in such month of the non-U.S. currency into U.S.
dollars as reported in the BLOOMBERG FINANCIAL MARKETS, COMMODITIES & NEWS (or
any mutually acceptable successor thereto).
(c) LATE PAYMENT. Payments hereunder shall be deemed paid as of
the day on which they are received at the account designated pursuant to
paragraph (a) above. Any payment which is not paid within fourteen (14) days
after the date when due shall accrue interest thereon from such date until
the date of its payment in full at one (1) percentage point over the per
annum interest rate published as the Prime Rate as reported in the BLOOMBERG
FINANCIAL MARKETS, COMMODITIES & NEWS (or any mutually acceptable successor
thereto), but in no event shall such rate exceed the maximum rate permitted
by applicable law.
SECTION 10.2 BOOKS AND RECORDS; ACCOUNTING.
(a) MAINTENANCE OF RECORDS. The Collaborators and Chiron, on
behalf of the JV shall maintain complete and accurate books of account in
accordance with generally accepted accounting principles and the principles
specified in Schedule V hereto, consistently applied, in sufficient detail to
allow the calculation of Allowable Expenses and Operating Profits under
Article 6 and the calculation of royalties under Article 8 to be verified.
The Collaborators and the JV shall retain such records for so long as the
Management Committee shall specify, and, in the event of a disagreement as to
the necessity of retention, or upon the dissolution of the JV, either
Collaborator may take possession of such records or copies thereof.
(b) ACCESS AND INSPECTION. The Collaborators shall have
reasonable access to the books and records of the JV while in the possession
of the JV, and each Collaborator, at its own expense (which shall not be an
Allowable Expense) and upon reasonable prior notice, shall have the right to
have such books and records examined and audited by outside auditors. Each
Collaborator shall make its relevant books and records available
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for inspection and audit by the independent accountant of the JV or of the
other Collaborator, at the expense of the inspecting party (which shall not
be an Allowable Expense), not more than once each calendar year, upon
reasonable prior notice and during normal business hours. Any inspection of
the JV's or a Collaborator's books and records shall be conducted subject to
the confidentiality obligations under Article 12 hereof.
ARTICLE 11 - CERTAIN REGULATORY MATTERS
SECTION 11.1 GOVERNMENTAL INSPECTIONS AND INQUIRIES
(a) Each Collaborator shall advise the Management Committee of any
governmental visits to, or written or oral inquiries about, any facilities or
procedures for the manufacture, storage or handling of a Product in the
Territory, promptly (but in no event later than fifteen (15) calendar days)
after such visit or inquiry. Each Collaborator shall furnish to the Management
Committee, within fifteen (15) days after receipt, a copy of any report or
correspondence issued by the governmental authority in connection with such
visit or inquiry, purged only of confidential or proprietary
information that is unrelated to the Products or the activities under this
Agreement.
(b) Each Collaborator also shall advise the other Collaborator of
any inquiry, notice or investigation initiated or made by any governmental
authority relating to the promotion, advertisement, marketing or sale of the
Products or any of its other activities under this Agreement. The
Collaborators shall cooperate and consult with each other in responding to
the governmental authority.
SECTION 11.2 ADVERSE REACTIONS. The Development Committee shall
establish procedures by which each Collaborator will receive notice from the
other Collaborator and the JV, and will report to the JV and the other
Collaborator, any adverse drug reactions related to a Product (including
events related to products containing the same active ingredient as
Products outside the Field and/or outside the Territory). The procedures shall
be established by the Development Committee promptly after the Effective Date.
Until such procedures ard approved, each Collaborator shall use its customary
procedures in complying with the reporting requirements of applicable law and
shall promptly furnish a written copy of any such report to the other
Collaborator. Prior to the establishment of the JV, Cephalon shall serve as
the reporting party for adverse events related to the Products.
SECTION 11.3 RECALLS AND MARKET WITHDRAWALS. If at any time (i) any
governmental or regulatory authority issues a request, directive, or order
that a Product be recalled or
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withdrawn, or (ii) a court of competent jurisdiction orders such a recall or
withdrawal in a Major Market, or (iii) the Management Committee determines
that a Product should be recalled in a Major Market, the parties shall take
all appropriate corrective actions to effect the recall or withdrawal. If a
dispute about the necessity of a recall can not be resolved in accordance
with Section 15.1 hereof, either Collaborator may order a recall (without
proceeding to arbitration under Section 15.2) if in its reasonable judgment
it is required to do so by law. The cost and expenses of notification and
destruction or return of the recalled or withdrawn Product in a Major Market
shall be an Allowable Expense.
ARTICLE 12 - CONFIDENTIALITY, ETC.
SECTION 12.1 CONFIDENTIALITY.
(a) INFORMATION RECEIVED FROM OTHER PARTY. Each Collaborator (a
"Recipient") will keep in confidence any confidential or proprietary
information (the "Confidential Information") received from the other
Collaborator (the "Furnishing Party"), whether furnished before or after
the Effective Date. The foregoing obligations shall not apply to, and the
definition of "Confidential Information" does not include:
(i) information that at the time of the use or disclosure by
the Recipient was already in the public domain other than through the
fault of the Recipient or its employees, licensees, agents or
subcontractors, in violation hereof;
(ii) information that was rightfully known by the Recipient (as
shown by its written records) prior to the date of disclosure by the
Furnishing Party to the Recipient in connection with this Agreement; or
(iii) information that was received by the Recipient on an
unrestricted basis from a source under no duty of confidentiality to the
Furnishing Party; or
(iv) information that Recipient believes in good faith is
required to be disclosed to comply with any applicable law, regulation or
order of a government authority of court of competent jurisdiction
(including any securities laws applicable to a Collaborator), in which
event the disclosing party shall use all reasonable efforts to advise the
other Collaborator in advance of the need for such disclosure; or
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(v) information that is independently developed by the
Recipient without reliance on the Confidential Information.
Notwithstanding the foregoing, it is understood that each Collaborator may
disclose Confidential Information to its employees, licensees, consultants,
contractors and agents if such persons are subject in writing to obligations
of confidentiality with respect to such information to the same extent the
Collaborator is so obligated hereunder.
INFORMATION DEVELOPED FOR COLLABORATION. Information in the Field
that is developed by a Collaborator in the conduct of a specific objective or
activity under a Development Plan and which would be proprietary to the
Collaborator shall be treated as Confidential Information by both
Collaborators. Any disclosure or publication of such information shall be
subject to the approval of the Management Committee (which approval shall not
be unreasonably withheld). A Collaborator shall not be obligated to treat any
other information developed by it (whether before or during the Collaboration)
as Confidential Information.
SECTION 12.2 INJUNCTIVE RELIEF. Each Collaborator acknowledges that damages
for breach of the covenants contained in Section 12.1 would be an inadequate
remedy, and that in the event of any such breach, the other Collaborator
shall be entitled to seek injunctive or other equitable relief in addition to
any and all remedies available at law or in equity, including the recovery of
damages and reasonable attorneys' fees.
SECTION 12.3 PUBLICITY. The Collaborators shall consult with each other
and coordinate all press releases and similar public announcements by the
Collaborator concerning the existence and terms of this Agreement and the
activities and progress of the Collaboration. The Collaborators shall not
disclose the confidential terms of such agreements to any third parties
without the prior written consent of the other party or parties thereto. This
Section 12.3 shall not apply to the extent that any disclosure is (a) of
information in the public domain other than through the fault of the
Collaborator or its employees, licensees, agents or subcontractors, in
violation hereof, (b) believed in good faith to be required to comply with
any applicable law, regulation or order of a government authority of court of
competent jurisdiction (including any securities laws applicable to a
Collaborator), in which event the disclosing party shall use all reasonable
efforts to advise the other Collaborator in advance of the need for such
disclosure, or (c) is made, under confidentiality, to a recipient who is a
licensor, licensee or potential licensor or licensee and to whom such
disclosure is reasonably required to define the scope of rights
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which could be granted to the recipient without violating the terms of this
Agreement.
ARTICLE 13 - CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 13.1 CORPORATE STATUS AND AUTHORITY. Each Collaborator
represents to the other that as of the date hereof:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b) it has the corporate power and authority to execute, deliver and
perform this Agreement;
(c) the execution, delivery and performance of this Agreement has been
duly authorized by all necessary corporate action on the part of each
Collaborator and the Agreement is binding and enforceable in accordance
with its terms;
(d) the execution, delivery and performance of this Agreement by such
party (i) does not conflict with, or constitute a breach or default under its
Certificate of Incorporation, bylaws, or any law, order, judgment or
governmental rule or regulation applicable to it, and (ii) does not conflict
with, or constitute a breach or default under or require any consent or
approval not obtained under, any provision of any material agreement,
contract, commitment or instrument to which it is a party;
(e) to its knowledge, it owns all patents, know-how and other
intellectual property rights included as of the Effective Date in its license
to the other Collaborator under Section 5.1 hereof, except for rights
licensed from or granted to third parties under the agreements listed on
SCHEDULE I hereof;
(f) to its knowledge, it is not required to obtain the consent or
approval of any third party to perform its obligations under this Agreement,
or to license or transfer such rights to the other Collaborator or to the JV
as contemplated under this Agreement; and
(g) in the case of Chiron, to its knowledge and except as disclosed
to Cephalon in writing, it owns all patents, knowhow and other intellectual
property rights required for use in the manufacture of the Products, except
for the rights specified on SCHEDULE I hereto, which are licensed by
Chiron from the third parties specified therein, and it has not received any
notice from a third party indicating that the manufacture of Products by
Chiron would infringe any intellectual property rights of any third party.
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SECTION 13.2 NO INCONSISTENT AGREEMENTS. Neither Collaborator shall
enter into any oral or written agreement after the date hereof that would be
inconsistent with its obligations under this Agreement or deprive the other
Collaborator of the benefits of the Collaboration in any substantial respect.
ARTICLE 14 -- DISCLAIMER, INDEMNIFICATION AND INSURANCE
SECTION 14.1 NO WARRANTY. EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE 8
HEREOF, NEITHER COLLABORATOR MAKES ANY EXPRESS OR IMPLIED WARRANTIES,
STATUTORY OR OTHERWISE, CONCERNING THE PRODUCTS OR THE TECHNOLOGY LICENSED BY
IT TO THE OTHER COLLABORATOR OR TO THE JV, NOR DOES THE JV MAKES ANY EXPRESS
OR IMPLIED WARRANTIES, STATUTORY OR OTHERWISE, CONCERNING THE JV TECHNOLOGY,
THE PRODUCTS OR ANY INFORMATION LICENSED TO A COLLABORATOR UNDER THIS
AGREEMENT. WITHOUT LIMITING THE FOREGOING, NEITHER COLLABORATOR NOR THE JV
MAKES ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR OTHERWISE, QUALITY OR USEFULNESS OF THE JV TECHNOLOGY
OR THE PRODUCTS.
SECTION 14.2 DEFENSE OF CLAIMS IN TERRITORY. Except as provided in
Article 9 hereof, each Collaborator and the JV shall be responsible for
defending itself against any liabilities, losses, costs, damages and expenses
(including reasonable attorneys' fees and costs) (collectively,
"Liabilities") resulting from a claim asserted by a third party arising out
of the manufacture, marketing, sale or use of a Product in the Territory,
including, without limitation, any claim in the nature of product liability
(whether under theories of strict liability, negligence, breach of warranty
or otherwise). If any such claim is asserted against both Collaborators
and/or the JV, the Management Committee shall control the defense of the
claim.
SECTION 14.3 COSTS AND EXPENSES.
(a) MAJOR MARKETS. Except as provided in Article 9 hereof, the
Costs (including any judgments or monetary damages awarded in an action)
incurred by the Collaborators or the JV in defending against any claim
described in Section 14.2 shall be an Allowable Expense to the extent
attributable to the Products in the Major Markets, unless the claim is caused
by: (i) the breach by the Collaborator or the JV of any covenant,
representation or warranty contained in this Agreement, or (ii) any act or
omission constituting gross negligence or willful misconduct by the
Collaborator or the JV in the development, manufacturing, labelling,
promotion, marketing or sale of a Product or any other activity conducted by
it under this Agreement (each, an "Excluded Liability").
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(b) ROYALTY TERRITORY. Except as provided in Article 9 hereof,
the Costs (including any judgments or monetary damages awarded in an action)
incurred by the Collaborators or the JV in defending against any claim
described in Section 14.2 shall be borne by the defending party (and shall
not be an Allowable Expense) to the extent attributable to the Products in
the Royalty Territory, unless the claim constitutes an Excluded Liability of
the other Collaborator, in which case the defending party may seek indemnity
from the other Collaborator under Section 14.4 hereof.
SECTION 14.4 INDEMNITY FOR EXCLUDED LIABILITIES. Each Collaborator
and the JV (as such, an "Indemnifying Party") shall indemnify, defend and
hold harmless the other Collaborator and the JV and its and their employees,
officers, directors and agents (as such, an "Indemnified Party") from and
against any Liabilities which the Indemnified Party may incur, suffer or be
required to pay resulting from or arising in connection with (i) any Excluded
Liability of the Indemnifying Party, (ii) any breach by the Indemnifying
Party of any agreement listed on SCHEDULE I to which it or an Affiliate is a
party, or (iii) the successful enforcement by an Indemnified Party of any of
the foregoing.
SECTION 14.5 PROCEDURES FOR INDEMNIFICATION. The obligations of the
Indemnifying Party under this Article 14 are conditioned upon the delivery of
written notice to the Indemnifying Party of any potential Liability, promptly
after the Indemnified Party becomes aware of such potential Liability. The
Indemnifying Party shall have the right to assume the defense of any suit or
claim related to the Liability if it has assumed responsibility for the
Liability in writing. If the Indemnifying Party defends the suit or claim,
the Indemnified Party may participate in (but not control) the defense
thereof, at its sole cost and expense (which shall not be an Allowable
Expense).
SECTION 14.6 SETTLEMENTS, ETC. Neither Collaborator may settle a
claim or action under this Article 14 without the consent of the other
Collaborator, if such settlement would impose any monetary obligation on the
JV or the other Collaborator or require the JV or the other Collaborator to
submit to an injunction or otherwise limit the other party's rights under
this Agreement.
SECTION 14.7 LIMITATION OF LIABILITY. With respect to any claim by
one party against the other arising out of the performance or failure of
performance of the other party under this Agreement, the liability of one
party to the other party for such breach shall be limited under this
Agreement or otherwise at law or equity to direct damages only; in no event
shall a party be liable to the other party for indirect, incidental or
consequential damages including, without limitation, lost profits.
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SECTION 14.8 INSURANCE. The Management Committee shall determine from time
to time the types and amount of insurance coverage, if any, to be maintained
by the JV and by each Collaborator to insure against the activities of the
Collaborators and the Collaboration. The Costs incurred by a Collaborator in
maintaining any insurance policy at the direction of the Management Committee
shall be an Allowable Expense to the extent authorized by the Management
Committee as attributable to its activities with respect to Products in the
Major Markets and otherwise shall be the responsibility of the Collaborator.
ARTICLE 15 - DISPUTE RESOLUTION
SECTION 15.1 DISPUTE RESOLUTION. If any dispute arises under this
Agreement which can not be resolved expeditiously by the Management Committee
after due consideration, the matter shall be submitted to the Chairman of
Chiron and the Chief Executive Officer of Cephalon for resolution. If the two
executives can not resolve the dispute to their mutual satisfaction within
thirty (30) days, the dispute shall be referred to arbitration under Section
15.2 below.
SECTION 15.2 ARBITRATION.
(a) Except as provided in subsection (d) hereof, all disputes arising
between Cephalon and Chiron under this Agreement that have not been resolved
pursuant to Section 15.1 shall be settled by arbitration conducted in the
English language in accordance with the procedures of the Commercial Rules of
the American Arbitration Association, before a panel of three arbitrators,
one of whom is selected by Cephalon, one of whom is selected by Chiron, and
one of whom is selected by Cephalon and Chiron (or by the other two
arbitrators, if the parties cannot agree). The parties shall request an
expedited hearing for any dispute related to a nonpayment hereunder, and
shall otherwise cooperate with each other in causing the arbitration to be
held in as efficient and expeditious a manner as practicable. Any arbitration
proceeding instituted by a Collaborator shall be brought in the principal
place of business of the defending party.
(b) Any award rendered by the arbitrators shall be binding upon the
parties hereto and shall be final, subject to review by a court of competent
jurisdiction under the statutory standard of review applicable to
arbitrations. Judgment upon the award may be entered in any court of record
of competent jurisdiction.
(c) Each party shall pay its own expenses of arbitration and the
expenses of the arbitrators shall be equally shared unless otherwise ordered
by the arbitrators.
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(d) Notwithstanding anything contained in this Section 15.2, each party
shall have the right to institute judicial proceedings against the other
party or anyone acting by, through or under such other party in order to (i)
enforce the instituting party's rights hereunder through specific
performance, injunction or similar equitable relief, or (ii) enforce its
rights under Article 12 hereof.
ARTICLE 16 - TERM AND TERMINATION
SECTION 16.1 TERM. This Agreement shall commence as of the Effective Date
and shall continue until the last sale of a Product in the Territory pursuant
to Article 4 or Article 7, unless terminated earlier in accordance with this
Article 16.
SECTION 16.2 TERMINATION OF AGREEMENT IN FULL.
(a) TERMINATION FOR COMMERCIAL FAILURE. This Agreement may be
terminated in full by either Collaborator, upon 180 calendar days written
notice to the other Collaborator, if in the good faith conclusion of the
terminating Collaborator, there is no reasonable, objective basis for further
development of any Product within the Field. The terminated Collaborator
shall, at its election, be a "Continuing Licensee" for purposes of Section
16.5(b) hereof.
(b) TERMINATION UPON BREACH. This Agreement may be terminated in full
by either Collaborator upon material breach by the other Collaborator of any
covenant, representation or warranty of this Agreement such that the
non-breaching party is denied in a substantial respect the economic benefit
of this Agreement and such breach is not substantially cured within sixty
(60) calendar days after the non-breaching Collaborator gives the breaching
Collaborator written notice of such breach. The terminating Collaborator
shall, at its election, be a "Continuing Licensee" for purposes of Section
16.5(b) hereof.
(c) TERMINATION BY MUTUAL AGREEMENT. This Agreement may be terminated
in whole or in part at any time by mutual written agreement of the
Collaborators.
SECTION 16.3 ACTIONS UPON CHANGE OF CONTROL. If either Collaborator
experiences one or more of the following events (a "Change of Control"):
(i) any person or group (other than a Collaborator or a group
including a Collaborator) becomes after the date hereof (whether by
tender or exchange offer or otherwise) the beneficial owner, directly or
indirectly, of securities of the Collaborator representing 50% or more
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of the combined voting power of such Collaborator's then outstanding
voting securities;
(ii) the membership of the Collaborator's Board of Directors
changes as a result of one or more contested elections within a two
year period such that individuals who were members of such Board prior
to any such contested election no longer make up a majority of such
Board; or
(iii) stockholders of the Collaborator approve a merger, plan of
consolidation, the sale or disposition of all or substantially all of
such Collaborator's assets, or a plan of partial or complete liquidation
of such Collaborator;
then the Collaborator experiencing the Change of Control shall promptly
furnish the other Collaborator with written notice describing such event
(reasonably in advance of such event, if possible, but in no event later than
ten (10) days after such event).
SECTION 16.4 PARTIAL TERMINATION IN ROYALTY TERRITORY. Chiron may
terminate its rights in any country in the Royalty Territory, in whole or as
to any Product, without cause, upon 180 days written notice to the JV.
SECTION 16.5 RIGHTS AND OBLIGATIONS ON TERMINATION.
(a) BALANCING. Upon termination of this Agreement pursuant to Section
16.2, the Collaborators shall balance any remaining deficiency in the equal
funding of Allowable Expenses between the parties in a transaction (such as a
purchase of assets) that is mutually acceptable to the parties and, at the
option of the Collaborator balancing the deficiency, does not result in a
current charge to the earnings of such Collaborator.
(b) RIGHTS OF A CONTINUING LICENSEE.
(I) SURVIVING LICENSES. A Collaborator who is a Continuing
Licensee may elect to have the applicable licenses granted to it or to
the JV under Article 5 convert into an exclusive license to the
Continuing Licensee, which shall survive termination of this Agreement
until the Continuing Licensee ceases to develop or commercialize
Products. The other Collaborator shall transfer to the Continuing
Licensee, upon request, all Confidential Information necessary or
useful for the manufacture, use or sale of the applicable Product in
its possession. In addition, the Continuing Licensee may elect to cause
the other Collaborator and the JV to transfer all Regulatory Approvals,
Pricing Approvals, marketing approvals, customer lists, contracts,
information or any other right that is necessary or useful for the
development, manufacture, use,
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marketing or sale of the applicable Product or Products. The other
Collaborator shall take such steps as are reasonably required to transfer all
such approvals, contracts, information and rights to enable the Continuing
Licensee to assume the business of developing, marketing and selling the
applicable Product or Products.
(ii) SUPPLY OF PRODUCTS. If the Continuing Licensee is not supplying
any of the applicable Product or Products under this Agreement, it may either
require the other party to continue to supply the applicable Product or
Products, upon the terms and for the period described below, or cause the
other party to transfer the required technology to the Continuing Licensee.
If a Continuing Licensee elects to require the other party to continue
to supply Products, it shall pay the supplying party, on a quarterly basis,
an amount equal to [CONFIDENTIAL TREATMENT REQUESTED] for all Products
continued to be supplied hereunder. The supplying party shall only be
obligated to supply Products for a reasonable transition period, which period
shall not exceed [CONFIDENTIAL TREATMENT REQUESTED] from the date that the
Collaborator elects to become a Continuing Licensee. The Continuing Licensee
shall use all commercially reasonable efforts to identify a replacement
manufacturer or establish a manufacturing facility for the Products in a
timely manner. The supplying party shall take such steps as are reasonably
required to enable the Continuing Licensee to assume the business of producing
the Products. If for any reason the supplying party is not legally permitted
to transfer the necessary technology or rights to the Continuing Licensee for
these purposes, the supplying party will continue to provide the applicable
Product or Products under this Agreement or to otherwise make available to the
Continuing Licensee the benefits of this Section 16.4, pursuant to
commercially reasonable terms to be mutually agreed upon by the parties. Any
amounts owed by the Continuing Licensee for Product supply under this
Agreement shall be set off against the amount, if any, of unbalanced
Allowable Expenses of the Continuing Licensee existing as of the effective
termination date of this Agreement.
If a Continuing Licensee elects to cause a transfer of the required
technology to manufacture Products, the transferring party shall take such
steps as are reasonably required to enable the Continuing Licensee to
manufacture (or have manufactured) the Products, including, without
limitation, by providing to the Continuing Licensee: (x) all manufacturing
information and descriptions of the applicable technology and processes in
sufficient detail to permit the manufacture of the Products in commercial
quantities in an efficient manner; (y) samples of all organisms or
other biological material used in producing such Products; and (z) training
of personnel as may be
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necessary to permit the manufacture of the Products. The Continuing Licensee
shall pay the transferring party a royalty on sales of Products at a rate to
be negotiated by the parties in good faith at the time of such license, but
shall not be more than [CONFIDENTIAL TREATMENT REQUESTED] of the royalties
payable by Chiron under Article 8 hereof.
(c) NON-COMPETE. A Collaborator that is not a Continuing Licensee shall
refrain from selling Products in the Field in the Territory and shall
refrain from participating, directly or indirectly, in any business,
partnership, collaboration, license arrangement or other enterprise engaged
in the business of the development, manufacture, marketing, use, distribution
or sale of Products in the Field and in the Territory for a period of five
(5) years after the termination date.
(d) ROYALTY TERRITORY.
(i) Cephalon shall have the right to assume Chiron's rights and
obligations as to any country or Product in the Royalty Territory upon
any termination of such country or Product under Section 16.4. However,
no such assumption by Cephalon shall operate as waiver of or otherwise
extinguish Chiron's obligations for liabilities accrued prior to the
termination date. Chiron shall cooperate with Cephalon to allow Cephalon
to conduct its business under this Agreement in a timely manner, including
taking such steps as are reasonably required to allow Cephalon to obtain
supplies of Products for purposes of this Agreement.
(ii) Upon termination of a country or Product in the Royalty Territory
by Chiron pursuant to Section 16.4, Chiron shall promptly deliver to the
JV or Cephalon, as applicable, all promotional materials and other data,
information, test results, marketing information, customer lists and
records, distributor lists and records, and any other information under
Chiron's control that is related to the manufacture, marketing or sale of
the applicable Product or Products in the applicable country or countries
within the Royalty Territory. Chiron also shall promptly transfer any
Regulatory Approvals and Pricing Approvals for the applicable Product or
Products in the applicable country or countries in the Royalty Territory
to the JV or Cephalon, as applicable, to the extent permitted by law.
(iii) Chiron may sell remaining inventory and finished goods for a
Product or Products as to which Chiron has terminated pursuant to Section
16.4 for a period not to exceed six (6) months, subject to the royalty
obligations and other provisions of this Agreement. Any inventory of
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Product remaining at the end of such period shall be transferred
pursuant to the instructions of the JV or Cephalon, the costs of which
shall be borne by the JV or Cephalon, as applicable.
SECTION 16.6 TERMINATION UPON CCP TRANSFER. If for any reason Cephalon,
after consultation with Chiron, either elects not to exercise its right to
purchase the limited partnership interests of CCP under the Purchase
Agreement included in the Cephalon Agreements, or Cephalon's rights under
this Agreement are transferred to CCP for any other reason (including breach
under the terms of the applicable Cephalon Agreements), Cephalon may transfer
its rights under this Agreement to CCP, unless either CCP or Chiron elects to
terminate this Agreement, upon 90 days written notice of termination to the
other. In the event of such termination, any license to a Continuing Licensee
under Section 16.5 hereof also shall terminate, the Chiron Technology shall
revert to Chiron and the Cephalon Technology shall revert to CCP, subject to
the perpetual licenses under Section 5.1 hereof.
SECTION 16.7 EFFECTIVE DATE OF TERMINATION. Unless otherwise provided
herein, a termination notice pursuant to this Article 16 shall be effective
on the date of delivery of written notice of termination to the other party
hereto.
SECTION 16.8 SURVIVAL. Neither Collaborator nor the JV shall be relieved
of its obligations to pay any sums of money due or payable or accrued under
this Agreement as of the date of such termination. All accounts between the
Collaborators and the JV shall be settled in full within ninety (90) days
following the termination of this Agreement under Section 16.2. Article 12,
Section 16.5 and this Section 16.7 shall survive the termination of this
Agreement. In addition, any provision required to interpret and enforce the
parties rights and obligations under this Agreement also shall survive to the
extent required for the full observation and performance of this Agreement in
accordance with its terms.
SECTION 16.9 REMEDIES NOT EXCLUSIVE. Termination by either Collaborator
pursuant to this Article 16 shall not prejudice any other remedy that such
party might have in law or equity with the exception, however, of claiming
compensation for loss or damages resulting from such termination.
ARTICLE 17 - MISCELLANEOUS
SECTION 17.1 ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the
entire understanding of the Collaborators with respect to the subject matter
hereof and supersedes all previous verbal and written agreements,
representations and warranties.
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This Agreement may be released, waived or modified only by written agreement
signed by the party against whom enforcement of any release, waiver,
modification, or other change is sought.
SECTION 17.2 REFERENCES TO CIBA. All references to CIBA in this
Agreement shall be effective for so long as CIBA has the right of first
refusal to sell or promote products containing IGF-1 under the CIBA
Agreement. If at any time CIBA ceases to have such right, all references to
CIBA's rights and obligations under this Agreement shall be of no further
force and effect.
SECTION 17.3 FORCE MAJEURE. Failure of any party to perform its
obligations under this Agreement (except the obligation to make payments)
shall not subject such party to any liability or place them in breach of any
term or condition of this Agreement to the other party if such failure is
caused by any cause beyond the reasonable control of such nonperforming
party, including without limitation acts of God, fire, explosion, flood,
drought, war, riot, sabotage, embargo, strikes or other labor trouble,
failure in whole or in part of suppliers to deliver on schedule materials,
equipment or machinery, interruption of or delay in transportation, a
national health emergency or compliance with any order or regulation of any
government entity acting with color of right.
SECTION 17.4 NO INTERFERENCE WITH EXISTING BUSINESSES. Each of Chiron
and Cephalon acknowledges that the other party is engaged in the business of
developing, manufacturing, marketing and selling products, including Products
outside the Field and products other than Products within the Field. Nothing
in this Agreement shall prevent either Collaborator from continuing to carry
on its business or to enter into agreements with third parties except as
expressly provided in Sections 4.6, 5.5 and 16.5(c) hereof.
SECTION 17.5 COMPLIANCE WITH LAW. Each Collaborator shall comply with
all laws, rules and regulations which are material to the conduct of its
activities under this Agreement.
SECTION 17.6 WAIVER. The failure of a party to enforce any breach or
provision of this Agreement shall not constitute a continuing waiver of such
breach or provision and such party may at any time thereafter act upon or
enforce such breach or provision of this Agreement. Any waiver of breach
executed by either party shall affect only the specific breach and shall not
operate as a waiver of any subsequent or preceding breach.
SECTION 17.7 NO ASSIGNMENT. No Collaborator may sell, assign, pledge
or otherwise dispose of all or any portion of its interest in the
Collaboration or right thereto without the prior written consent of the other
Collaborator, except that no such consent is required for any transfer to an
Affiliate or to a
-55-
successor to substantially all of the Collaborator's business. Subject to the
foregoing, this Agreement shall inure to the benefit of and be binding upon
the Collaborators and their respective permitted successors and assigns.
SECTION 17.8 SEVERABILITY. If any clause or provisions of this
Agreement is declared invalid or unenforceable by a court of competent
jurisdiction, such provision shall be severed and the remaining provisions of
the Agreement shall continue in full force and effect. The parties shall use
their best efforts to agree upon a valid and enforceable provision as a
substitute for the severed provision, taking into account the intent of this
Agreement.
SECTION 17.9 NOTICES. Any notice, request or other communication
required to be given pursuant to the provisions of this Agreement shall be in
writing and shall be deemed to be given when delivered in person or five days
after being deposited in the United States mail, postage prepaid, certified,
return receipt requested, or by overnight courier (return receipt requested),
to the parties addressed as follows:
(a) If to Chiron to:
Chiron Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attn: Office of the President
Tel: (000) 000-0000
FAX: (000) 000-0000
With a copy to:
Law Department
Chiron Corporation
Tel: (000) 000-0000
FAX: (000) 000-0000
(b) If to Cephalon, to
Cephalon, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxx Xxxxxxx, XX 00000
Attn: President
Tel: (000) 000-0000
FAX: (000) 000-0000
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With a copy to:
Xxxxxxx X. Xxxxxxxxx
Xxxxxx, Xxxxx & Xxxxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Tel: (000) 000-0000
FAX: (000) 000-0000
Either party may change its address or its FAX number by giving the other
party written notice, delivered in accordance with this Section.
SECTION 17.10 PRONOUNS. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular or plural, as
the context may require.
SECTION 17.11 FURTHER INSTRUMENTS. Each Collaborator shall execute
and deliver such further instruments and do such further reasonable acts and
things as reasonably may be required to carry out the intent and purpose of
this Agreement.
SECTION 17.12 GOVERNING LAW. The validity, performance, construction,
and effect of this Agreement will be governed by the laws of the State of
Delaware, without giving effect to conflict of law rules.
SECTION 17.13 COUNTERPARTS. This Agreement shall become binding when
any one or more counterparts hereof, individually or taken together, bears
the signature of each of the parties hereto. This Agreement may be executed
in any number of counterparts, each of which shall be an original as against
the party whose signature appears thereon, but all of which taken together
shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, each party has caused this Agreement to be signed by
its duly authorized officer as of the date first above written.
CHIRON CORPORATION CEPHALON, INC.
By: /s/ Xxxxxxx X. Xxxxxx, Ph.D. By: /s/ Xxxxx Xxxxxxx, Xx.
------------------------------- --------------------------------
Name: Xxxxxxx X. Xxxxxx, Ph.D. Name: Xxxxx Xxxxxxx, Xx.
Title: Chairman Title: President and Chief
Executive Officer
SCHEDULE I
THIRD PARTY AGREEMENTS
[CONFIDENTIAL TREATMENT REQUESTED]
-59-
[CONFIDENTIAL TREATMENT REQUESTED]
-60-
SCHEDULE II
FIELD EXCLUSION
[CONFIDENTIAL TREATMENT REQUESTED]
-61-
SCHEDULE III
SOD TECHNOLOGY
[CONFIDENTIAL TREATMENT REQUESTED]
-62-
SCHEDULE IV
THIRD PARTY ROYALTIES
[CONFIDENTIAL TREATMENT REQUESTED]
-63-
SCHEDULE V
DEVELOPMENT EXPENSES FOR TRANSITION PERIOD
[CONFIDENTIAL TREATMENT REQUESTED]
-64-
SCHEDULE VI
ALLOWABLE EXPENSES AND ACCOUNTING PRINCIPLES
To be prepared in accordance with Section 2.3(c).
-65-
SCHEDULE VII
PREFERRED INDICATIONS OF CHIRON
[CONFIDENTIAL TREATMENT REQUESTED]
-66-
SCHEDULE VIII
CEPHALON NONFIELD INDICATIONS
[CONFIDENTIAL TREATMENT REQUESTED]
-67-
Exhibit 10.85
[CONFIDENTIAL TREATMENT REQUESTED]
[Certain information has been omitted herein pursuant to a request for
confidential treatment pursuant to Rule 24b-2.]
[Letterhead]
January 13, 1995
VIA FEDERAL EXPRESS
Chiron Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Re: COLLABORATION AGREEMENT
Gentlemen:
This letter is intended to confirm certain mutual understandings in
connection with the Agreement between Cephalon, Inc. and Chiron Corporation
dated January 7, 1994 (the "Agreement") related to the joint development and
commercialization of IGF-1 and other specified compounds. All capitalized
terms not otherwise defined herein are used as defined in the Agreement.
1. The 1994 budget of Allowable Expenses by Cephalon for the use of IGF-1
in the treatment of ALS has been approved by the Management Committee
in the form attached as EXHIBIT A to this letter.
2. The 1994 budget of [CONFIDENTIAL TREATMENT REQUESTED of Allowable
Expenses by Chiron for IGF-1 has been approved by the Management
Committee.
3. Section 6.1 of the Agreement is amended to read in its entirety as
follows:
"SECTION 6.1 SHARING OF OPERATING PROFITS AND LOSSES. The
Operating Profits and Operating Losses from the Major Markets and
the Royalty Territory shall be shared equally by Cephalon and
Chiron, except (i) for the special allocation described in
Section 6.2(a) hereof, and (ii) Cephalon shall receive from the JV
a royalty of [CONFIDENTIAL TREATMENT REQUESTED] in the Major Markets
in Europe (i.e., the EC and EFTA countries) of a Product containing
IGF-1 for use in treating ALS, before Operating Profits and
Operating Losses are calculated."
Chiron Corporation
January 13, 1995
Page 2
4. Cephalon will be responsible for the Costs related to the IGF-1 program
that were incurred by Cephalon in 1994, as specified on EXHIBIT B
hereto, and for any other Costs related to the European ALS study that
are designated as non-Allowable Expenses in the 1995 budget to be
approved by the Management Committee (all of such Costs being referred
to as the ""Reimbursable Costs"). However, Cephalon shall be entitled
to make draws under the Line of Credit Note to fund one-half of the
Reimbursable Costs, not to exceed $10 million. The Line of Credit Note
is hereby amended to the extent required to permit such draws and is
further amended to extend the Maturity Date of the Note by one year, to
January 6, 2000.
5. Chiron shall have no right to receive any of the Operating Profits from
Net Sales in the Major Markets in Europe of a Product containing IGF-1
for use in treating ALS, unless it elects to repurchase its rights by
reimbursing Cephalon for the Reimbursable Costs, by written notice to
Cephalon delivered at any time before the earlier of (i) filing by
Cephalon of the first request for regulatory approval to market a
product containing IGF-1 in a Major Market, or (ii) the Maturity Date
of the Line of Credit Note. To repurchase such rights, Chiron shall
reimburse Cephalon for 50% of the Reimbursable Costs, plus interest
accrued at [CONFIDENTIAL TREATMENT REQUESTED], compounded annually from
the date the Reimbursable Cost was incurred. The reimbursement shall
be paid out of Chiron's share of Operating Profits in the Territory from
Net Sales of a Product containing IGF-1 for use in treating ALS. All of
Chiron's share of Operating Profits in the Territory will be subject to
the reimbursement, on a dollar-for-dollar basis, until the Reimbursable
Costs, plus accrued interest, have been paid in full. All such
reimbursements shall be applied first, to pay accrued interest and second,
to pay the principal of the Reimbursed Costs. Chiron may at any time
prepay the Reimbursable Costs, plus interest accrued to the date of
prepayment.
If Chiron elects to reimburse the Reimbursable Costs, Cephalon shall
repay the outstanding principal of the Line of Credit Note related to
the draws used to fund the Reimbursable Costs in an amount equal to, and
concurrently with, each payment by Chiron of Reimbursable Costs. If
Chiron gives written notice of its election to repurchase such rights,
the Maturity Date of the Line of Credit Note shall automatically be
extended to the extent required to permit the payment by Cephalon of
such principal of the Note concurrently with reimbursement by Chiron of
the Reimbursable Costs.
Chiron Corporation
January 13, 1995
Page 3
If the foregoing accurately reflects your understanding as to these
matters, please indicate your agreement in the space provided below.
Very truly yours,
/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Executive Vice President &
Chief Operating Officer
Accepted and agreed to by:
CHIRON CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
cc: Xxxxx Xxxxxxx, Xx., Ph.D.
Xxxxxxx X. Xxxxxxxxx, Esq.
EXHIBIT A
[CONFIDENTIAL TREATMENT REQUESTED]
EXHIBIT B
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED]
[Certain information has been omitted herein pursuant to a request for
confidential treatment pursuant to Rule 24b-2.]
Exhibit 10.85
May 23, 1995
VIA FAX
Chiron Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Esq.
Re: AMENDMENT TO AGREEMENT
Gentlemen:
This letter is to confirm our understanding as to certain matters under
the Agreement dated January 7, 1994 between Cephalon, Inc. and Chiron
Corporation, as amended (the "Agreement"). All terms not otherwise defined
herein are used as defined in the Agreement.
1. If Chiron is not for any reason manufacturing on behalf of the
Collaboration commercial supplies of a Product containing IGF-1, and
Cephalon is manufacturing the Product, Cephalon will receive [CONFIDENTIAL
TREATMENT REQUESTED] of the Operating Profits from the Major Markets and the
Royalty Territory, and Section 6.1 of the Agreement is hereby amended to add a
new clause (iii) after the word "except", which states in its entirety as
follows:
"(iii) if Chiron is not for any reason manufacturing on behalf of the
Collaboration commercial supplies of a Product containing IGF-1,
Cephalon will receive an additional [CONFIDENTIAL TREATMENT REQUESTED] of
the Operating Profits from the Major Markets and the Royalty Territory
attributable to Net Sales of any such Product that was manufactured by
Cephalon (the 'Manufacturing Premium') (i.e., for a total share of
[CONFIDENTIAL TREATMENT REQUESTED] of such Operating Profits)."
2. The payment by the Collaboration of Manufacturing Premium does not
operate as a waiver of any party's rights or obligations under the Agreement,
including Chiron's obligations to manufacture Products in accordance with the
terms of the Agreement.
3. Chiron has elected not to participate in Cephalon's option to
buy-down the royalty rate and license fees payable under a License Agreement
dated March 5, 1992, as amended, between Cephalon and The Salk Institute of
Biotechnology/Industrial Associates, Inc ("SIBIA"). Even if Cephalon
exercises its option to buy-down the SIBIA compensation, the Collaboration
will nevertheless continue to be responsible for the full amount of the
compensation (royalties and license fees) owed to SIBIA under the SIBIA
License as in effect before such buy-down, to the extent such compensation
results from the activities of the Collaboration. The payments of SIBIA
Chiron Corporation
May 23, 1995
Page 2
compensation will be made to Cephalon, who will remit the appropriate amount
to SIBIA. As an illustration, assuming that before the buy-down the royalty
owed to SIBIA on sales of a Product in the Field is
[CONFIDENTIAL TREATMENT REQUESTED] and that Cephalon buys down
[CONFIDENTIAL TREATMENT REQUESTED] of the SIBIA royalty, the Collaboration
will pay Cephalon the [CONFIDENTIAL TREATMENT REQUESTED] royalty and Cephalon
will remit the [CONFIDENTIAL TREATMENT REQUESTED] royalty to SIBIA.
If the above accurately describes our understanding, please indicate
your agreement in the space provided below.
Sincerely yours,
/s/ Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Executive Vice President and
Chief Operating Officer
Acknowledged and agreed to by:
CHIRON CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
